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: or give me a call. As always, thank you for your interest!

Bernie Greenberg

Wednesday, June 20, 2012

AICPA Urges Congress to Speed Up on Permanent Estate Tax Changes | Audit Profession News & Events

If you ever wondered why estate planning can be difficult, one reason is the ever-changing estate tax laws. These changes are a result of political in-fighting in Washington and not the result of tax policy. In this brief article, the AICPA describes nicely why a permanent fix to our federal estate tax laws is critical.

AICPA Urges Congress to Speed Up on Permanent Estate Tax Changes | Audit Profession News & Events

Without a permanent, or even semi-permanent estate and gift tax exemption, estate planning, at best, can only be temporary for clients. This forces many clients to opt for solutions that run counter to how they would plan if the exemptions were fixed.

What do you think about this issue? Is this something that you care about. I hope that everyone becomes interested in this due to what happens with your exemptions on January 1, 2013. Unless Congress and the President agree on a fix for this, your estate, gift and generation skipping tax exemptions are reduced on that date to $1,000,000. This is significant since that number is about 460% less than the exemption was back in 1987 when adjusted for inflation.

I look forward to your questions and comments. Thank you.

Bernie Greenberg