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As previously discussed with our estate planning clients, we recommend that your estate plans be reviewed on a periodic basis, and that your plans should definitely be revisited when there is a change in your personal circumstances, probate law or tax law. The new federal tax law signed by President Obama on December 17, 2010 increased the gift and estate tax exemption amount to $5 million for 2011 and 2012, with a top tax rate of 35%. In 2013, without further changes, the federal gift and estate tax exemption amount will be reduced to $1 million with a top tax rate of 55%. The new tax law contains other provisions affecting all aspects of estate planning, especially for estates exceeding $1 million. The level of sophistication involved in planning large estates make it absolutely necessary that individuals work with capable estate planning attorneys in evaluating and implementing changes to their present estate plans. This is particularly important for individuals whose assets are under the current $5 million dollar threshold ($10 million for married couples), but are likely to be over the anticipated $1 million per person threshold in 2013. Individuals whose assets are over the $5 million threshold should also evaluate their personal situations to determine whether they can afford substantial gifts in 2011 or 2012 while still maintaining their present lifestyles. We recommend that you review your existing wills and trusts NOW to make certain they will work as intended under the new tax law. The calculations are complicated and expert advice is recommended. It is good to plan ahead rather than get caught in a last-minute rush to make estate and gift planning changes. I sincerely hope this article carries a clear message that an excellent window exists this year and next for estate and gift tax savings and that delays in estate planning may result in lost opportunities. James R. Petrie |