Will the Election affect the Estate & Gift Tax Laws?

Last year, we wrote about the major changes in the estate and gift tax laws. As we near the end of 2012, it's hard to believe that the tax laws are up for discussion in Congress AGAIN! The laws that were put in place in 2010 are set to expire on January 1, 2013, and the estate tax exemption will revert to $1 million with a 55% tax rate on anything over $1 million.

With the pending election, much focus is on the bottom line....and if the exemptions expire, it will be a drastic reduction from the current rate, which is a $5 million exemption per person ($10 million for couples using a "portability" election), with a 35% tax on the overage, and an annual exclusion for tax-free gifts at $13,000 per donee. A donor may make $13,000 gifts to an unlimited amount of different individuals, up to $5 million total.

Thus, the clock is ticking on a potentially disappearing benefit: the ability to gift $5 million with NO TAX. If you are a single person with more than $5 million, or a married couple with more than $10 million, you may want to consider gifting money or assets out of your estate to take advantage of the tax break, either by a direct gift or in trust for your heirs.

Come January 1, 2013, no one can predict what Congress will do: extend the tax rate for another short period of time, or permanently? Or, let the tax laws sunset and revert back to a $1 million exemption. It's anyone's guess.

If you have questions regarding the planning of your estate or if you about to start an estate plan, it is located in your best interest to speak with a qualified attorney. We have helped numerous clients throughout Orange County, and surrounding counties with estate planning matters. At our law corporation, you will receive the personalized attention and prompt service that you deserve. Call (714) 573-7149 or email info@estateplanning.net to schedule your complimentary consultation.

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