It is important to understand the fact that estate planning is not a “one and done” kind of thing. There are events take place in your own life that call for estate plan updates and as we all know the only certainty is change. But in addition to the twists and turns that are specific to you and your family, there are also things that take place that can impact your existing estate plan that are outside of your control such as changes to the tax laws. With this in mind let’s examine the current state of affairs.
The gift tax is unified with the estate tax, and the combined exclusion is $5 million; the rate of both taxes stands at 35%. These figures are in place due to provisions contained within the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. This measure is going to expire when 2012 comes to a close. Under current laws, in 2013 the rate of both the gift tax and the estate tax is going up to 55% and the unified exclusion is going to be reduced to $1 million.
A similar scenario played itself out at the end of last year before this new tax act was passed so it is always possible that new legislation could be enacted that impacts the estate tax and alters the above parameters. But as things stand right now, it would seem as though 2012 is a good year to give gifts because of the fact that the exclusion is so much higher than it is going to be in 2013.
Situations such as these are delicate because of the uncertainties involved, but 2012 could very well be a good year for giving tax-free gifts. The best way to proceed in this regard would be to discuss the matter in detail with an experienced, savvy estate planning attorney.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
- What Is Uniform Transfer to Minors Act? - December 1, 2021
- Titling Property – Rights of Survivorship - November 24, 2021
- National Family Caregiver Month - November 18, 2021
