After 2012, the estate tax law will revert to what was in effect before 2001 unless Congress acts. The current $5.12 million estate and gift tax exemption would fall to $1 million, while the maximum tax rate will rise to 55%…a 20 percentage-point increase.
Lawmakers haven’t done anything to establish a set of permanent rules on estate and gift tax, leaving estate tax planners and their advisors up in the air. But any action on the rules for 2013 will be put off until after the November elections.
Experts in this area are predicting that the most likely outcome is a one-year extension of the 2012 rules for 2013.
It is a good idea to consider taking advantage of the higher gift tax exemption. By making gifts, all future income and appreciation on the assets that you give away is removed from your estate, so it’s best to give assets that you expect will soar in value. This can save your heirs between 35-55% of your taxable estate.
You should look into this soon if you have an estate of $10 million or more in assets. Estate tax attorneys will be slammed for the rest of the year. If you wait until November you may have a hard time getting an appointment.
Like any good CPA, I need to add a disclaimer: Unfortunately, it is impossible to offer comprehensive tax info over the Internet, no matter how well-researched or written. And remember, I love my readers, but having me bookmarked on your computer doesn’t make you a client: Before relying on any information given on this site, contact a tax professional to discuss your particular situation.