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What You Need to Know About the Estate Tax Law Changes
Today, more than ever, you need to have a strategy in place in order to pass on as much of your
estate as you can to your loved ones. Below are frequently asked questions about how recent changes
in the federal estate tax laws affect you and your family.
Haven't estate taxes been repealed?
What does this mean for transferred assets?
What happens in 2010?
What happens in 2011?
How can I best plan for my estate?
How can Transamerica Occidental Life help me cope with changes in the estate tax laws?
What if the estate tax repeal is extended or made permanent in 2010 and I don't want to surrender my policy?
Haven't estate taxes been repealed?
Yes and no. The 2001 Economic Growth and Tax Relief Reconciliation Act of 2001 says:
- Federal estate taxes will gradually reduce and be completely eliminated for one year only in 2010; BUT
- They'll reappear the next year, 2011, unless the law is extended or made permanent through new legislation.
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What does this mean for transferred assets?
The amount of estate tax-free assets that can be transferred per person increases according to this schedule:
| 2002-2003 |
$1 million |
| 2004-2005 |
$1.5 million |
| 2006-2008 |
$2 million |
| 2009 |
$3.5 million |
If both spouses died in 2002, a married couple could transfer up to $2 million in assets to their loved ones, free of federal estate taxes; in 2004, $3 million; and so on. As in the past, there is an unlimited amount that can be transferred from one spouse to the other at the time of death without any federal estate tax consequences.
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What happens in 2010?
In 2010, the federal estate tax will be repealed—for one year. If you die in 2010, you can leave an unlimited amount
of assets to your heirs without incurring federal estate tax, although state inheritance and death taxes may still
apply, as well as other costs. Also,
your loved ones may owe capital gains taxes when they sell the inherited assets.
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What happens in 2011?
According to the Economic Growth and Tax Relief Reconciliation Act of 2001, when the estate tax is reinstated in 2011:
- A single person will only be able to leave up to $1 million at death without estate tax exposure.
- Amounts in excess of $1 million will be subject to estate tax, with tax rates starting at 41% and rising to 55%.
Few experts think that estate tax elimination will continue beyond 2010.
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How can I best plan for my estate?
Smart planning can only be based on current law and not hoped-for future changes, so if you leave a sizable estate,
it's best to plan for the burden of estate taxes at death.
Properly structured life insurance could provide the liquidity needed for estate taxes due on assets you transfer to
your loved ones. Life insurance can also provide cash for other expenses, such as probate, estate administration, income
taxes, or state inheritance taxes.
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How can Transamerica Occidental Life help me cope with changes in the estate tax laws?
Transamerica Occidental Life Insurance Company's unique Sunset Option, available only on
our TransACE SurvivorSM
GL or TransSurvivorSM
Life VUL policies, is designed to help you weather the changes.
The Sunset Option gives you a valuable window of opportunity: If your insurance contract is in force in 2010 and
the estate tax repeal is extended or made permanent through new legislation, you can fully surrender your policy in 2010
with no company-imposed surrender charges.* The Sunset Option is automatically included at no extra charge on those
survivorship policies issued on or after June 7, 2001!
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What if the estate tax repeal is extended or made permanent in 2010 and I don't want to surrender my policy?
You don't have to. If you choose, you can:
- Continue the existing policy and provide an enhanced estate for your beneficiaries;
- Continue coverage to provide funds to help pay capital gains tax on the sale of inherited assets, or in some states cover potential state inheritance taxes; or
- Divide the survivorship policy into two individual policies to provide proceeds after the first death, subject to the requirements specified in the split option in the survivorship policy.
Consult with your financial advisor and your Transamerica
representative to help you determine the proper amount of life insurance and type of policy necessary for your estate. Transamerica Occidental Life Insurance Company and its representatives do not provide tax or legal advice. Please consult with and rely solely upon your own tax or legal advisor regarding your particular situation.
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*Surrender penalties will apply to partial surrenders and/or face amount reductions during this period, and on all full surrenders requested outside this period.
TransACE Survivor® GL is a nonparticipating, flexible premium universal life insurance contract issued by Transamerica Occidental Life Insurance Company, Cedar Rapids, IA. Contract Form No. 1-12111102 (CVAT), Group Certificate No. 2-73436102 (CVAT), for certificates issued under a group policy issued to the Rhode Island National Consumer Protection Trust. Contract form and number may vary, and this product may not be available in all jurisdictions.
TransSurvivorSM Life VUL is a variable universal life insurance policy issued by Transamerica Occidental Life Insurance Company, Cedar Rapids, IA, and distributed by Transamerica Securities Sales Corporation. Policy Form No. 1-17911101 (CVAT) and Group Certificate #2-77936101 for certificates issued under a group policy issued to the Rhode Island National Consumer Protection Trust. Policy form and number may vary, and this product may not be available in all jurisdictions. Not available in New York. Variable universal life insurance products are not insured by the FDIC or any regulatory agency. Riders may not be available in all states. This product is subject to investment risk, including possible loss of principal amount invested.
TransSurvivorSM Life VUL (Policy Form No. 1-17911101) is a variable universal life insurance policy issued by Transamerica Occidental Life Insurance Company, Cedar Rapids, IA, and distributed by Transamerica Securities Sales Corporation. Policy form and number may vary, and this product may not be available in all jurisdictions. Not available in New York. Variable universal life insurance products are not insured by the FDIC or any regulatory agency. Riders may not be available in all states. This product is subject to investment risk, including possible loss of principal amount invested. Prospective policyowners should read the prospectus carefully before investing or sending money. Prospectuses may be obtained from your registered representative. All sales must be made only when preceded or accompanied by current prospectuses for the product and the underlying portfolios. The prospectus contains information regarding risk considerations, charges, and expenses.
Variable universal life insurance is offered by prospectus only. Prospectuses may be obtained by contacting a Transamerica representative or logging on to www.transamerica.com. The prospectus contains additional information about Transamerica Occidental Life Insurance Company and the product, including its objectives, risks, charges, and expenses. You should read the prospectus carefully and consider the investment objectives, risks, charges, and expenses of the funds carefully before investing or sending money.
EMB 405 0705
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