This is the year to revisit your family estate plan. In 2012, the Federal Estate, Gift, and Generation Skipping Tax Act has a $5.12 million exemption per person plus a 35 percent top marginal /flat tax rate. In 2013, the personal exemption will scale down to $1 million per person for estate, gift, and generation skipping taxes. In addition, the top marginal or flat tax-rate will jump to 55 percent. WOW! Now is the time to do your estate and tax planning with the possibility to save your family heirs (i.e., your children’s millions of dollars in tax liability now.)Timing is critical to act now and do your diligence with your hired financial and legal tax experts. And proactively address your tax planning strategies! Presently in congress and the political climate with both parties in chaos, say, next year, it is unclear where the Upper and Lower Congress (U.S. Senate and Congress) will made some radical changes to the current tax laws.Some good information here, low interest rates benefit arbitrage techniques and strategies that can facilitate an increased value of your estate assets. Notwithstanding with current market conditions, may allow you to transfer assets and any gain upon those assets out of your estate. As of today, short term GRATS (Grantor Retained Annuity Trusts) are still available to help facilitate the protection and your assets that will be transferred your family some day.
Gifting now, NOT later, makes great financial sense for you and your family. Gifts given now, provide more years of growth and value of your transferred assets outside your estate. In addition, you will have more preservation of those assets from Federal taxation of the transfer of your estate.
I suggest, if you have some intentions and if you plan for a best case scenario, i.e., to transfer your assets at your golden years of life to your loved one’s and with the objective to minimize extreme IRS estate taxation. Therefore, take advantage of the tax code “today,” for estate planning as it is presently codified. In addition, presumably, your family will have the knowledge of the operations of your business/companies. Along with effective mentorship and financial, legal and expert accounting input, you will hopefully evolve an estate-planning model for you that are congruent with your family estate planning wishes. Presently, the current mood of Congress and President Obama is tentative due to an upcoming election year. Surprisingly, in my opinion, the Republicans and Democrats have preserved some of the IRS policies NOW in place that may be to your advantage to evaluate. The Upper and Lower Congress have crafted some great estate planning strategies and structures, I suggest that you take another look at your family and estate planning strategies. Again, there are some provisions within the IRS code, as are NOW in place, that you may want to examine — your estate planning. Otherwise, as the Congress and the President roles may soon likely change, it is plausible that you may lose access to some of the current favorable family and estate planning rules. Certainly, these are interesting times, politically, who knows what political forces may in some in not to distant future date, eliminate some of the favorable estate planning rules in place today.
2012 has given all of us amazing tax advantages to gift, estate plan and provide generation skipping benefits to those we love. Now is the time to think about your wealth management and what you want to accomplish with it. Time is truly running out — 2013 will be here in eleven months.
Please feel welcome to contact me on any of these issues. I work with some national law firms and accounting firms addressing family estate planning.
Leah Stapleton CFP
