As we ring in the year 2013, millions of individuals will face as much as a 20% increase in estate taxes. In 2010, President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act (“TRUIRJCA” or “TRA 2010” for short). The provisions of this law were temporary and will end as we begin the new year. The sunset of TRUIRJCA is particularly noteworthy for estate planning, since the estate tax exemption, as well as the lifetime gift tax exemption, will both be reduced from $5.12 million back to $1 million, and the generation-skipping transfer tax exemption will be reduced from $5.12 million to approximately $1.4 million. The maximum tax rate will likely jump to 55% by the end of 2013.
Although there was little discussion of this during the recent presidential debates, the significance of it deserves attention and immediate action before year-end. It is important to entertain what options are available to protect your assets from the increase of up to 20% more in estate taxes, due to the fact that everything over $1 million will be taxed at the highest rate.
If succession planning strategies have not been on your radar screen, you are not alone. Most people tend to procrastinate about such things. However, if you want to explore your options available with estate or succession planning and seek cost-effective measures to save money before the end of 2012, you must act now.
Perhaps you might think that this applies to people with considerable assets and not to members of the middle class. Unfortunately, this is not the case. On January 1, 2013, when TRUIRJCA comes up for renewal, President Obama has clearly indicated that he will not renew the law. Therefore, members of the middle class, as well as high net worth individuals, will face major changes ahead in 2013.
Time is of the essence and putting together a game plan now can help you to be assured when TRUIRJCA expires. Congress has the authority to renew TRUIRJCA but there is no guarantee that it would do so.
The gift exemption is likely to get worse before it gets better in 2013. It is important to explore your options and establish a plan to legally reduce what taxes are owed and to protect your hard-earned money. Act now to structure and protect your assets.
Estate planning serves to protect your assets so that they are transferred from one generation to another, charities, non-profit organizations, churches, or some other individuals. The estate planning process also serves to assist clients in legally avoiding paying estate taxes. Some ways to accomplish this are through wills, trusts, limited liability companies, family limited partnerships, powers of attorney, and deeds.
If you want to beat the January 1, 2013 deadline for the expiration of TRUIRJCA, you should seek the advice of an experienced Wisconsin estate planning attorney. Daniel J. Krause, with Krause Law Offices LLC, can work with you to develop a comprehensive estate plan that will fit your needs.