Estate Planning Uncertainty in an Election Year
April 19, 2012 By John Rogers Burk, A Law Corporation
Tax laws have a direct and significant impact on your estate plan. During an election year, such as this year, the fate of many tax laws is often uncertain. Scheduling a review of your current estate plan with your estate planning attorney is a good way to make sure that your plan takes advantage of the current tax laws and anticipates any scheduled changes.
A change in administration could result in a change in philosophy with regard to tax laws. As the tax laws currently stand, there are a number of them that are set to expire or change for 2013 including the following:
Investments: The maximum rate for long-term capital gains could rise to 20% from 15% unless Congress acts before the end of the year. Stock dividends, currently taxed at a maximum of 15%, will also be taxed as ordinary income, with a top tax rate of 39.6%
Estate Tax Exemption: Currently at $5 million, the exemption is scheduled to drop back down to $1 million next year in 2013.
Gift Tax Exemption: Also currently at and all time high of $5 million and set to return to $1 million in 2013.
Estate Tax and Gift Tax Rates: Currently set at a maximum of 35%, both will revert to a maximum rate of 55% on January 1, 2013 absent action by Congress.
Payroll Tax Cut: Adds about $40 to the average worker’s take home pay. Congress extended the tax cut through 2012, but its future is uncertain.
Tax Rates: President Bush implemented a tax rate cut that is still in effect putting the rates at 10% - 35%. If they expire, individual tax rates will return to 15% - 39.6%.
Alternative Minimum Tax: The AMT was originally intended to prevent high income taxpayers from avoiding taxes; however, it was not indexed for inflation, resulting in more taxpayers being required to use the AMT over the years. A “patch” has been used by Congress each year to fix this, but the “patch” doesn’t extend to 2012 at this time. As many as 31 million taxpayers are expected to be impacted if another Patch is not forthcoming.
Tax Deductions and Credits: Numerous temporary deductions and credits have been adopted to help ease the financial stress of the recession. There is no guarantee that these will be extended.
ABOUT THE AUTHOR: John Roger_Burk
Experienced estate planning attorneys Roseville CA of the John Rogers Burk, A Law Corporation offers estate planning and business planning resources to residents of Roseville CA.
Copyright John Rogers Burk, A Law Corporation
More information about John Rogers Burk, A Law Corporation
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
Investments: The maximum rate for long-term capital gains could rise to 20% from 15% unless Congress acts before the end of the year. Stock dividends, currently taxed at a maximum of 15%, will also be taxed as ordinary income, with a top tax rate of 39.6%
Estate Tax Exemption: Currently at $5 million, the exemption is scheduled to drop back down to $1 million next year in 2013.
Gift Tax Exemption: Also currently at and all time high of $5 million and set to return to $1 million in 2013.
Estate Tax and Gift Tax Rates: Currently set at a maximum of 35%, both will revert to a maximum rate of 55% on January 1, 2013 absent action by Congress.
Payroll Tax Cut: Adds about $40 to the average worker’s take home pay. Congress extended the tax cut through 2012, but its future is uncertain.
Tax Rates: President Bush implemented a tax rate cut that is still in effect putting the rates at 10% - 35%. If they expire, individual tax rates will return to 15% - 39.6%.
Alternative Minimum Tax: The AMT was originally intended to prevent high income taxpayers from avoiding taxes; however, it was not indexed for inflation, resulting in more taxpayers being required to use the AMT over the years. A “patch” has been used by Congress each year to fix this, but the “patch” doesn’t extend to 2012 at this time. As many as 31 million taxpayers are expected to be impacted if another Patch is not forthcoming.
Tax Deductions and Credits: Numerous temporary deductions and credits have been adopted to help ease the financial stress of the recession. There is no guarantee that these will be extended.
ABOUT THE AUTHOR: John Roger_Burk
Experienced estate planning attorneys Roseville CA of the John Rogers Burk, A Law Corporation offers estate planning and business planning resources to residents of Roseville CA.
Copyright John Rogers Burk, A Law Corporation
More information about John Rogers Burk, A Law Corporation
View all articles published by John Rogers Burk, A Law Corporation
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
