If you haven’t already structured your estate plan to take advantage of the federal gift tax exemption, you are nearly out of time. Currently, the federal exemption allows you to pass just over $5 million in assets as gifts to others without those gifts being subjected to estate taxes. However, when December 31, 2012 arrives, the gift tax exemption will vanish and will be replaced by a $1 million exemption on January 1, 2013, unless Congress passes a new tax law.
Without a new tax law, once 2013 arrives, any gifts you give in excess of the $1 million limit will be taxed at a 55% rate. This represents a significant increase in the potential tax burden your estate could face. For high net worth individuals, failing to take advantage of the $5 million window before it expires is a significant mistake.
However, the time to act is nearly gone. Even if you are in a position where you can benefit from the increased gift tax exemption, you should consult with an experienced and qualified estate planning attorney immediately. To properly take advantage of the exemption requires some time and planning, and with only a few months left in the year some people may already be out of luck.
Taking advantage of this exemption is very important, as the only chance of the exemption being extended or continued relies upon Congress to come together and reach an agreement about this issue which recent history indicates is no sure thing.
Timothy P. Murphy
Latest posts by Timothy P. Murphy (see all)
- How Does a Veteran Qualify for Aid and Attendance? - June 14, 2019
- What Is a Reverse Mortgage? - June 12, 2019
- Tips for Choosing Fiduciary Roles in Your Estate Plan - June 10, 2019
Leave a Reply
You must be logged in to post a comment.