One of the things to take into consideration when you are serious about keeping your estate plan up to date is the fact that federal estate and gift tax laws are always changing. Your estate may be free of taxation one day and heavily exposed the next, and this is not an exaggeration.
At the end of this year there are some significant changes pending that are very relevant to anyone planning ahead for the future. The tax relief act that was passed in 2010 expires when 2012 comes to a close. At that time the combined estate/gift tax exclusion goes down to just $1 million and the rate rises to 55%.
Right now the unified exclusion is $5.12 million and the top rate is 35%.
If you put all that information together you will see a fleeting opportunity. For the rest of this year you can give gifts totaling as much as $5.12 million tax-free. But at the end of the year this figure goes down to just $1 million.
It may be a good idea for many people to consider giving gifts at some point prior to the end of the year in an effort to take advantage of this rapidly closing window.
The best way to decide if this course of action is right for you is to seek out professional advice. If you would like to discuss your unique situation with an expert, right now would be a good time to set up an appointment to speak with a Willoughby OH estate planning lawyer who has a thorough understanding of proven tax efficiency strategies.
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