During the midterm election year of 2010 the Bush era tax cuts were scheduled to expire. This became an issue that was hotly debated on the campaign trail, and immediately after the elections a new tax relief bill was indeed passed. It has subsequently been named the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.
Now we are in another election-year and there is a sense of déjà vu in the air. The aforementioned tax relief act is going to expire at the end of this year, and it is very likely that the possibility of extending the tax relief will be debated among the candidates.
This is a very relevant issue for people who are interested in estate planning. Under the terms of the tax relief act we have a $5.12 million exclusion this year, and it is portable meaning that your surviving spouse could use your exclusion after you pass away.
The maximum rate of the tax is 35%, and this rate is also applicable to the gift tax and the generation-skipping transfer tax.
If there are no changes to the current legal trajectory the above figures will change in 2013. The top rate of the tax will climb to 55%, and the exclusion will go down to $1 million. In addition, the estate tax exclusion will no longer be portable.
As the candidates debate the issues taxes will invariably be discussed, and the above situation is likely to be a hot topic. This is something to pay attention to because the way that it pans out could have a big impact on your planning efforts.
Because of the possibility of significant changes to the tax code it would be advisable to discuss your current situation with an expert. If you are serious about wealth preservation, take action right now to arrange for an informative consultation with a seasoned, savvy Somerset County NJ estate planning lawyer.