Dedon on Estate Planning

Planning to Use Exemption Amounts

Set forth below is an article published last week in VA Business Magazine pertaining to how a married couple can each use their $5,120,000 gift exemption while the opportunity lasts, and yet still benefit from the assets.

Download Va bus mag art 2-16-12

 

 

Let the Games Begin

President Obama’s 2013 Budget proposal was released this week. As expected, there are restrictions on estate and gift tax strategies that have been useful during 2011 and 2012. A couple of the proposals are repeats from his prior recommendations. These include eliminating 2-year rolling GRATS and valuation discounts between family members.

Most significantly, the President desires a $3.5 million estate tax exemption and a $1 million gift and generation skipping tax exemption. Thus, for 2013, as during 2009, a married couple can protect $7 million upon death, and can gift $2 million during their lifetimes. The estate tax rate would be 45%. These proposed limits would dramatically reduce the current advantages available to wealthy taxpayers, which allow for a $5 million exemption amount upon death or for lifetime gifts. As relatively bad as the Obama proposal is for estate planning purposes, if Obama and Congress fail to agree on estate legislation in 2012, in 2013 the death and tax exemption amounts will be only $1 million per person and a 55% tax rate.

What does it all mean? A lot of uncertainty, but for wealthy taxpayers considering asset transfers, act this year.