Estate planning experts have been watching the developments over budget and taxation policy in view of the recent “fiscal cliff” issue. The American Taxpayer Relief Act of 2012 has provided some clarity on estate planning issues, but those concerned with wills, trusts and other estate factors will need to be aware of changes that may affect the way estates are structured.
Estate planning was in limbo for some experts while Congress was working out the estate tax exemption, portability and other issues related to inheritance. Current law now makes the $5 million estate tax exclusion permanent and allows surviving spouses to use any portion of a partner’s unused estate tax exemption as well.
Despite the fact that Congress is calling the change “permanent,” experts warn that there is no such thing when it comes to tax policy. Any law regarding estates can be changed in the future; however, for now, Congress’s commitment to permanence in estate tax policy is reassuring to experts. Congress not only fixed the estate tax exclusion at $5 million to be indexed for inflation annually but also permanently unified gift tax, generation skipping tax and federal estate tax. Lifetime gift tax applies only to amounts over $14,000 per person per year.
Those who are concerned with the transfer of their property to heirs may benefit from the advice of an estate planning attorney, especially in light of recent changes to estate tax law. An estate planning attorney may be able to help these individuals devise a good plan for safe and cost-effective transfer of assets to heirs.
Source: Life Health Pro, “Estate planning in a post-fiscal cliff world,” David Port, March 26, 2013