New Rates, New Exemptions, New Gifting Opportunities
The 2010 Act opens the door to creative planning techniques
On Dec. 17, 2010, President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (the Act). Among other things, the Act makes changes in the tax law for calendar years 2011 and 2012 that: (1) increase the applicable exclusion amount for estate and gift taxes, (2) increase the generation-skipping transfer (GST) tax exemption, (3) reduce the top estate, gift and GST tax rates to 35 percent, (4) reunify the credits against gift and estate tax, and (5) create portability of the unused estate applicable exclusion amount of a deceased spouse. These changes have long- and short-term consequences, so advisors must consider the impact of the Act when advising their clients about estate-planning strategies and decisions. Here's an overview of the changes in the gift tax laws, planning opportunities and how those opportunities may be integrated with changes in the estate and GST tax laws. Here are the specifics of the Act: Exclusion amounts/tax rates — The applicable exclusion amount for estate and gift tax is increased to $5 million per person in 2011 and 2012. The exclusion amount may be increased by an inflation adjustment for calendar year 2012 (Section 302(a) of the Act). The GST tax exemption also is increased to $5 million per person, effective as of Jan. 1, 2010 and may also be increased by an inflation adjustment for 2012. The top estate, gift and GST tax rates are 35 percent (Section 302(a) of the Act). To continue reading, click here.WHAT'S NEW?
