The New Era of Estate Planning

Canton Estate PlanningThe fiscal cliff deal of the new year has brought some changes to the estate planning process. There was a whole section in the act dedicated to estate and gift taxes, which could mean changes for your estate plan.

Forbes detailed the new codes and what they mean for the future of your estate plan. The American Taxpayer Relief Tax Act of 2012, commonly referred to as the fiscal cliff deal, increased the amount you are allowed to gift or pass through your estate plan before taxes. The exemption from 2012 will be permanent, though it will be adjusted for inflation each year. In 2013, the number will be $5.25 million. If your estate goes over this limit, the money will be taxed. The tax rate has increased from 35% to 40%, so it will be a huge hit if you go over the $5.25 million maximum.

Many high earners were worried at the end of the year because their fate was in limbo. Attorneys were working overtime at the end of the year to adjust estate plans before the fiscal cliff deal was made. It is important to keep your estate plan up-to-date with the latest law changes so that the plan remains effective for you.

Another reason to update your estate plan is because portability, or the ability to transfer your exemption to your spouse after you die, was made permanent. Together, couples can transfer $10.5 million, tax-free.

The high exemption, however, does not mean that you do not need to do as much estate planning, as there are still hoops to jump through. For example, you must fill out an estate tax return when your spouse dies to claim their unused exemption, even when there are no taxes to be paid. This is crucial because you could lose your spouse’s exclusion if you do not. This is why it’s important to have a good attorney to help you sort everything out. When you go at estate planning alone, it can be hard to sort through these things during such an emotional time.

The new deal might spur you to re-do or edit your will, which would also be a smart move. If you do not have an estate plan, it is time to make one! You want to do it before it is too late: you will rest easier knowing your assets are settled and your family is protected.

About David Ferrell

For over 30 years, David B. Ferrell has practiced excellence in the areas of probate, estate planning, DUI, and divorce law. David Ferrell is dedicated to providing each client with personal service, trustworthy advice, and expert representation. David B. Ferrell's Google+ Profile

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