Last Chance - Estate Tax Saving Opportunity May Expire At Year End
For approximately the next two months, we have estate, gift and generation skipping transfer (GST) tax exemptions of $5.12 million, a maximum gift and tax rate of 35%, and “portability” of any unused estate tax or gift tax exemption of a predeceased spouse to the surviving spouse. However, without further congressional action, as of January 1, 2013, the gift and estate tax exemption levels will revert to $1 million, the GST exemption will decrease to $1.39 million, the maximum tax rate will be 55%, and portability will no longer apply.
That means a gift of $5.12 million made before the end of the year may save over $2 million of estate taxes on your death, depending on what action Congress takes. Keep in mind that gifts may be made in trust, the terms of which are sufficiently flexible to take future circumstances into account.
President Obama’s budget proposal, announced earlier this year, would set the estate and GST exemptions at $3.5 million, but set the gift tax exemption at only $1 million. In addition, the estate, gift and GST tax rates would be increased from 35% to 45%. Accordingly, we may not see exemptions as generous as the current exemptions anytime soon.
We would be pleased to discuss the possibilities with you, and determine whether any planning opportunities are suitable for your situation.
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