Monday, June 25, 2012

5 Ways The Election Upcoming Affects Your Estate Plan

Do You Know How Your Estate Plan is Affected by the Upcoming Elections? These five impacts could destroy your family's plan!

If you haven't been following the on-going debate about federal estate tax policy, you may not be aware of how much the upcoming election affects your estate plan. The impact may be greater than you think!

1. If your estate plan is based on the federal estate tax exemption it will severely impacted since the exemption drops from $5 million to $1 million on January 1, 2013. You will want to check your plan to make sure this drop doesn't negatively affect your family and property.

2. If your plan relies on the exemption against the generation skipping transfer tax, it requires immediate review. The GSTT exemption also reduces to $1 million on 1/1/2013.

3. If you are using the exemption against the federal gift tax to eliminate or reduce gift taxes on large gifts, your estate plan is severely affected by the reduction in the gift tax exemption to $1 million on 1/1/2013.

4. While these exemptions may seem large, when you count your life insurance, IRA's and pensions as part of your taxable estate, they are not overly large, especially come January 1, 2013 when all these exemptions are reduced to $1 million. Many of my clients feel like their estates are modest until we sit down and add up things like life insurance death benefits.

5. If your plan relies on a mandatory allocation at the first death to a family or exemption share trust, your plan is being controlled by whatever Congress does with the exemption. With the drastic reductions in these three exemptions coming January 1, 2013, how you thought your estate plan works is no longer the case.

Whether the Congress and President may fix this estate planning asteroid is the subject for other articles and I make no prediction here about that. However, the results of this upcoming election could have significant bearing on the direction that politicians decide to take our estate tax policy. While this may be positive or negative depending on your political leaning, there is little debate that leaving your family's security to the the whims of politicians is unwise.

To learn how these upcoming changes may affect your family, please leave me a comment here, or send me an email to: bgreenberg@kgattys.com or give me a call. As always, thank you for your interest!

Bernie Greenberg

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