As you may be aware, the “Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010”, which passed on December 17, 2010, raised the Federal estate and gift tax exemption for 2011 and 2012 to $5 Million dollars per person ($10 Million for gift splitting spouses) and reduced the top tax rate to 35%. Since then, Antheil Maslow & MacMinn has been advising clients to consider taking advantage of those provisions by using estate planning techniques which involve making lifetime gifts. According to the Act, on January 1, 2013, the estate and gift tax exemptions are scheduled to revert to $1 Million per person, and the top tax rate will rise to 55%. Additionally, there is growing speculation that the Super Committee's report (due on November 23rd), or the resulting legislation, will shorten the time to act, making it important to plan now. Those who choose not to take advantage of the current legislation could pay up to $2.2 Million more in Federal estate and gift tax.
For clients who could have Federal estate tax exposure, the present uncertainty provides an additional incentive to take advantage of the current $5 Million exemption by planning now rather than risk losing the benefit. In addition to the favorable current estate and gift tax laws, low interest rates and depressed asset values (real estate in particular) have made a lifetime gifting strategy even more appealing.
We do not know who may become subject to a Federal Estate Tax in the future. It is possible that will include a single person with a net worth above $1,000,000 or a couple above $2,000,000, but taking advantage of the current $5 Million lifetime exemption before it expires offers an unprecedented opportunity. If you have not considered making gifts this year, or have decided to give but have not implemented your plan, you are encouraged to contact your regular AMM attorney, or either Alan G. Wandalowski, Esq. or Timothy M. White, Esq., from our estate planning department, to discuss how implementing gifting strategies in 2011 may enhance your estate plan.