We are in a familiar if not altogether comfortable situation in 2012 with regard to the estate tax parameters. Uncertainty reigns, but we may begin to see some clarity as the election season heats up this year.
Back in 2010 we had a midterm election, and the question of possibly extending the Bush era tax cuts was part of the debate. You may remember that a tax relief measure was in fact passed at the end of that year that is now called the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.
This piece of legislation resulted in a $5.12 million estate tax exclusion this year coupled with a 35% top rate. Had it not been passed, the rate was scheduled to be 55% and the exclusion was going to be $1 million.
We are in the same situation this year. The more recent tax relief act is expiring when 2012 comes to a close and once again that $1 million/55% framework will be in place when and if it does in fact sunset.
However, here we are in an election year once again. Taxes are always a subject of debate, and changes are always possible as we saw back in 2010. So if you want to get a feel for how the winds are blowing with regard to the estate tax you would do well to listen closely to the discussions taking place among the candidates.
The fact is that revisions to your existing plan may be necessary depending upon what takes place between now and the end of the year. To gain some clarity with regard to where you stand, simply take a moment to arrange for a consultation with a seasoned, savvy Indianapolis estate planning lawyer.
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.