Palm Springs Estate Planning Lawyer Blog
The current estate tax laws are likely to revert to pre-EXTRA levels beginning on January 1, 2013. This means that the estate taxes will be levied at estates over $1,000,000 with a tax rate of up to 55%. Considering the value of real property, life insurance and retirement accounts many individuals may find themselves included in the estate tax bracket. However, 2012 has historically low tax rates and historically high exemptions which allows for creative and unique planning before January 1, 2013.
GIFTING
The current lifetime gift exemption is $5,000,000. The annual exclusion amount is currently at $13,000 but an individual can give up to $5,000,000 during life tax free. This gift exemption is scheduled to go back to $1,000,000 as well in 2013. Therefore, 2012 is a great year for making lifetime gifts.
PORTABILITY
For Decedent’s dying in 2011 and 2012 Executors can elect to “port” the decedent’s unused estate tax exclusion to surviving spouses. This will be especially important if the exemption level returns to $1,000,000.
Now is the time to take advantage of these planning opportunities. The future is uncertain and these historically high exemption amounts may disappear forever on January 1, 2013.
