For those weighing what to do with the
assets they have accumulated over a lifetime, the next few weeks may be time to
make the final call. That’s because the current federal tax exemption on
estates and gifts is set to roll back on Jan. 1 from $5.12 million to $1
million — the same level it was at in 2002, before tax cuts passed during the
George W. Bush era went into effect.
There are times to make your
moves and then there are times to sit, think, and await the proper time; which
time is it for you? Well, if you have been following national politics and the
impending fiscal (tax) cliff, then you know about the very definite deadline on
estate planning opportunities expiring on December 31, 2012.
Don’t hold your breath that the
White House and Congress will come to the rescue in the nick of time.
As a recent MarketWatch article sums it up, there’s “No playing chicken with estate tax deadline.”
The present estate planning laws offer an unprecedented and generous gift tax
exclusion. That is worth thinking about, too. The exclusion amount of the
estate tax is tied to the gift tax amount and is therefore just as generous
(but not many taxpayers are keen to qualify for that before year’s end).
Gifts, on the other hand, are
easy to make. This especially is true as the holiday season is nearly upon us.
With the current exclusion set to $5.12 million, you can give that much in your
lifetime over and above the annual exclusion amount of some $13,000. Better
yet, you can give this entire amount before December 31 if you so choose to
secure the full exclusion amount. Why? Because the exclusion is automatically
set to drop to $1 million unless the White House and Congress take action.
Overly cautious taxpayers may
miss out on this wealth transfer bonanza to the tune of some $4.12 million that
otherwise could have passed to their loved ones tax-free.
Contact Meier Law Firm to discuss all of your gifting and estate planning options.
(October 2, 2012) “No playing chicken with estate tax deadline”