Family Estate Planning – Favorably High Tax Exemptions to Expire in 2012
At the beginning of 2011, important changes were made to the way gifts made during life and at death were taxed. Under current law, the amount each person can give cumulatively during their lifetime and upon their death without being subject to tax was $5,000,000. In 2012, that exemption amount will increase to $5,120,000. (It should be noted that this tax exemption is in addition to the annual exclusion from gift tax which is $13,000, that gifts to spouses are generally not taxed and that a surviving spouse may be able to use the unused exemption amount of a deceased spouse.) The estate and gift tax rate for transfers above the exemption amount also changed to 35%. The high exemption amounts expire on December 31, 2012 with the basic exemption amount falling to $1,000,000, the rate rising to 55% and no sharing of a spouse’s exemption. Will we see new legislation enacted before the $1,000,000 exemption comes back? 2012 is an election year and tax reform is already a hot topic with many proposals floating about. Anyone considering making large lifetime gifts should do so sooner rather than later to take advantage of what may turn out to be historic and temporary high exemption levels and low rates.
For more information regarding these laws, or for assistance with estate and tax planning, please contact Dickenson, Peatman & Fogarty at [email protected].