We are faced with some haziness this year when it comes to the estate tax parameters.
The current lay of the land is scheduled to change radically at the end of this year if no new legislation is passed to alter the existing trajectory. However, since we are in an election year, taxes will be a topic of debate. The political discourse may provide us with some clues with regard to what we may expect from the estate tax going forward.
As the laws are written right now, we would see a reduction in the exclusion from $5.12 million to $1 million in 2013. The exclusion would no longer be portable either, meaning that a surviving spouse could not use the exclusion that was due to his or her deceased husband or wife.
The tax rate is scheduled to change as well. Currently, the maximum rate of the estate tax, the gift tax, and the generation-skipping transfer tax is 35%. At the end of this year this figure is going to rise to 55%.
Back in 2010, the same framework ($1 million/55%) was in place for 2011 until the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 was passed late in the year. So, it is not inconceivable that some sort of new legislation could pass that alters things as they currently stand.
We will all be watching closely as the matter is volleyed about by the political hopefuls during the campaign season.
In spite of the uncertainty, one thing is indeed clear: The estate tax can play havoc with your legacy. There are some extraordinary estate tax planning opportunities between now and year end. To gain an understanding of where you stand, take action right now to arrange for a consultation with a licensed and experienced Oklahoma City estate planning lawyer.