Is the end of the year the end of estate planning? Is this the end of your estate plan? Maybe!
The end of 2012 will bring huge changes to the world of estate planning. Unless the Congress and President act, three central foundations of estate planning will drastically change, and the change for you is all bad. How does this affect your estate plan? Maybe not at all and maybe it is the end for your plan. Read on to learn more.
The End of Estate Planning As We Know It? Probably Not.
First, let's review what happens at the end of the year. The three major tax exemptions used in estate planning, estate tax, gift tax and generation skipping transfer tax all revert from $5 million to only $1 million starting January 1, 2013. Much of what we do in estate planning is built on these three exemptions.
However, I don't think it is the end of estate planning as we know it. Since we don't let the tax tail wag the family dog, what this will mean is that millions more will be doing more complex estate plans since the exemptions will be significantly lower. So for us estate planning lawyers that will be good! For the clients,not so much. We will still do estate plans for the same reasons as before: to protect our clients, their families and their property. But starting in 2013, millions who had no estate, gift or generation skipping tax concerns will now have them--in spades.
The End of Your Plan? Perhaps!
If you didn't do estate tax planning previously because your estate was less than $5 million, you may have to do so now. If you had a plan that used your estate tax exemptions, it just won't work as well for your family with the much lower exemptions starting in 2013.
What should you do? Have your plan reviewed immediately. Next, write your Congressional representatives and Senators and tell them how you feel about this. Maybe your voice will make a difference. We recommend to all of our clients to not depend on politicians to solve your families' estate plan issues. Don't do it now.
And maybe, just maybe, Congress and the President will come to their respective senses and fix this with some finality and permanency so you can have some certainty knowing that your estate plan will operate the way that it is supposed to. But don't count on it!
what are your thoughts? Please join our conversation on estate planning and these issues. I look forward to hearing from you.
Bernie Greenberg
BECAUSE DEATH AND TAXES: Learn about what you need to do to be prepared for what's coming. Wills, trusts, taxes, probate. If you haven't experienced it you will. Estate planning is one of the most important things you can do to protect yourself and your family. Please join Bernie Greenberg's world of estate planning. www.kgattys.com
Tuesday, July 10, 2012
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
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
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
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
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