By now, everyone knows the American Taxpayer Relief Act of 2012 raised the income tax rates for the highest earners to 39.6%. Most everyone knows the American Taxpayer Relief Act of 2012 continued the estate and gift tax exemption of $5,000,000.00 per person or decedent ($10,000,000 for a married couple) adjusted for inflation (the 2013 exemption is estimated at $5, 250,000).
For the last several years, estate law has been in flux, hardly an ideal situation for estate planning. Provisions made one year could, with the passage of news laws or the expiration of old ones, could become obsolete. With the American Taxpayer Relief Act of 2012, the estate planning landscape has stabilized. New laws are of course always a possibility but for the first time in several years, the specifics of estate law don’t have an expiration date attached to them.
If you have not updated your estate documents in a few years, you will certainly want to look at them now. The gift tax exemption is considerably higher than it was just a few years ago. Most estate plans establish a marital trust, a residuary trust and a generation skipping trust. The permanent effect of the higher exemption when applied to documents drafted more than two years ago (even within the last two years if care was taken to avoid adverse results) can result in leaving substantially less or even no funds subject to unfettered control by your spouse.
For more information on how the American Taxpayer Relief Act of 2012 affects you, or for other tax law concerns, contact Horowitz Law Offices.