STRATEGIES TO TAKE ADVANTAGE OF 2012 ESTATE PLANNING OPPORTUNITIES
The window of opportunity to make large gifts in a tax-efficient manner is scheduled to close at the end of this year. Perhaps you are already considering making significant gifts this year or are being advised by your friends, family members or advisers to make these gifts before it is "too late" to do so come 2013. The discussion below summarizes why 2012 may provide a special opportunity to make large gifts and planning options that take into account some related issues.
The 2012 opportunity
The current federal estate and gift tax exemption and the generation-skipping transfer ("GST") tax exemption for each individual is $5,120,000 (resulting in up to $10,240,000 of exemption for married couples). Absent congressional action, on January 1, 2013, the estate and gift tax exemptions are scheduled to revert to $1,000,000 and the GST exemption is scheduled to be about $1,400,000. In addition, in 2013 the current top transfer tax rates of 35 percent would increase to 55 percent. Of course, there are other possible legislative outcomes. The bottom line is that if the gift, estate and GST exemptions in future years are, in fact, less than the current $5,120,000, making large gifts before the current law sunsets at the end of the year may provide significant estate tax savings later.
What if you are not sure you want to give away so much of your wealth?
You will want to take many factors into consideration in deciding how much you can afford to give away and, just as important, would be comfortable giving away. Below are several strategies that may increase your level of comfort in making large gifts in 2012.
What if your disposable assets are not the "ideal" type to use to make gifts?
There is no single type of asset that is the best to use in making gifts in all contexts. Gifts of cash are easy to make, are easy to value and have no built-in appreciation. But what if your disposable assets consist largely of low-basis stock? Or if your assets are illiquid, as may be the case if a significant portion of your net worth consists of real estate, works of art or a family business? In such a case, you may wish to consider one of the following strategies.
What if you are afraid of having "too much" end up in the hands of your children?
For any number of reasons, you may feel inheriting more than a certain amount of property could be detrimental to your children and their own families, and you may have qualms about making gifts of the full 2012 gift tax exemption amount of $5,120,000 (or $10,240,000 for married couples). While you need to decide what will be right for your family, there are several ways to address this concern using a trust.
Please let us know if you would like to discuss making gifts before the end of the year.
President Obama's budget plan for fiscal year 2013, released in February of this year, proposes a number of changes to the estate, gift and generation-skipping transfer ("GST") tax laws. Although many of the changes have been proposed in the past without being enacted, these proposals are likely to be among the items under consideration as Congress contemplates the looming increase in federal transfer taxes next year. The following summarizes the key proposals in the budget plan:
These proposals have not yet been introduced as legislation and would not take effect until next year, so no immediate action is necessary. However, if you have not updated your estate planning documents in the past few years, this may be an appropriate time for a more comprehensive review of your estate plan to ensure that it still meets your estate planning needs and objectives.
On May 13, Day Pitney International Trusts and Estates Partner Sarah B. Jacobson spoke on the panel, "Welcome to Miami, Bienvenidos a Miami!: Pre-Immigration Planning When Moving to the Magic City," at the STEP Miami Annual Summit.
Special Needs Planning Partner Meredith Greene will hold a webinar for The Arc of the South Shore on "Guardianship & Alternatives," on May 4.
On April 28, Special Needs Planning Partner Meredith H. Greene will hold a webinar, "Guardians and the Other Alternatives," with The Arc of Bristol County.
Special Needs Planning Partner Meredith Greene will hold a webinar for The Arc of Greater Haverhill-Newburyport on "Transition Boot Camp & Beyond: Guardianship & Alternatives," on April 14.
Individual Clients Department Partner Dina Kapur Sanna Co-Chaired the 17th International Estate Planning Institute sponsored by STEP-NY and the New York State Bar Association Trusts & Estates Law Section, the International Section on March 31 and April 1 where Individual Clients Department Partner Carl Merino also spoke.
Day Pitney Press Release
Trusts and Estates Attorney Leigh E. Furtado has been elected a Fellow of the American Bar Foundation (ABF).
Florida-based Counsel Jay D. Mussman received special commendations from the Legal Aid Society of Palm Beach County, the Florida Supreme Court and the Florida Pro Bono Coordinators Association for his pro bono work in the years 2019 and 2020.
Miami Partners Sarah B. Jacobson and Georgia A. Thompson's promotion to partnership were featured in Florida Bar News' On The Move Column.
Providence-based Trusts and Estates attorneys Joshua Caswell and Leigh E. Furtado's article "NFTs for Estate Planners: Not Just a Token Concern," won "Best Cutting-Edge Article" in the ABA's Probate & Property Magazine's 2021 Excellence in Writing Awards.