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WHAT DID THE FISCAL CLIFF DEAL (JAN 2013) DO TO YOUR ESTATE PLAN?

WHAT DID THE FISCAL CLIFF DEAL (JAN 2013) DO TO YOUR ESTATE PLAN?

As you may already know, in the first two days of 2013, Congress passed a tax compromise to avert the so called “fiscal cliff.” But what did it do for your estate plan?

Federal Exemption Amount

Some good things came of it. The federal estate tax exemption of $5.12 million per individual (indexed to inflation, it is actually $5.24 million in 2013) became permanent. If your estate is over that amount, your tax rate is 40%.

This exemption is higher than the $3.5 million exemption that Obama was calling for. So the Congress worked in our favor. (By the way, if they had not passed this new tax law, the exemption would have reverted to $1 million, exposing many middle class families to estate taxes.)

So what does that mean for you? I always recommend a yearly trust check-up.  I have written an article about the 5 Important Things to Check. At the beginning of this new year, I encourage you to pull out your trust and review it. Make sure it says what you want it to say and that it gives what you have to whom you want.

Gift Tax

The lifetime gift tax exemption is now $5.24 million per individual. This exemption will be indexed for inflation.

The annual exclusion is $14,000. This is the maximum you can give every year.  You can transfer $14,000 to each of as many people as you would like. So, if you had five grandchildren, you could transfer $14,000 to each grandchild for a total of $70,000 transferred free of gift tax.

If you have any questions, please call our office. (480) 447-2447.

New Book

I have written a new book called “Estate Planning: A Plain English Guide to Wills and Trusts.” For a limited time, I am giving it away free.  (pdf) While it is still at the printer, you can get the first chapter. Then when the book comes out, I will send you the instructions on how you can download the entire book! Go to http://www.EstatePlanningDr.com/free-first-chapter. Hurry. This is for a limited time only.

 

 

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