Is the end of the year the end of estate planning? Is this the end of your estate plan? Maybe!
The end of 2012 will bring huge changes to the world of estate planning. Unless the Congress and President act, three central foundations of estate planning will drastically change, and the change for you is all bad. How does this affect your estate plan? Maybe not at all and maybe it is the end for your plan. Read on to learn more.
The End of Estate Planning As We Know It? Probably Not.
First, let’s review what happens at the end of the year. The three major tax exemptions used in estate planning, estate tax, gift tax and generation skipping transfer tax all revert from $5 million to only $1 million starting January 1, 2013. Much of what we do in estate planning is built on these three exemptions.
However, I don’t think it is the end of estate planning as we know it. Since we don’t let the tax tail wag the family dog, what this will mean is that millions more will be doing more complex estate plans since the exemptions will be significantly lower. So for us estate planning lawyers that will be good! For the clients, not so much. We will still do estate plans for the same reasons as before: to protect our clients, their families and their property. But starting in 2013, millions who had no estate, gift or generation skipping tax concerns will now have them–in spades.
The End of Your Plan? Perhaps!
If you didn’t do estate tax planning previously because your estate was less than $5 million, you may have to do so now. If you had a plan that used your estate tax exemptions, it just won’t work as well for your family with the much lower exemptions starting in 2013.
What should you do? Have your plan reviewed immediately. Next, write your Congressional representatives and Senators and tell them how you feel about this. Maybe your voice will make a difference. We recommend to all of our clients to not depend on politicians to solve your families’ estate plan issues. Don’t do it now.
And maybe, just maybe, Congress and the President will come to their respective senses and fix this with some finality and permanency so you can have some certainty knowing that your estate plan will operate the way that it is supposed to. But don’t count on it!
What are your thoughts? Please join our conversation on estate planning and these issues. I look forward to hearing from you.