Is the Gifting Window Closing Sooner than Expected?
We have previously reported to you about a window of opportunity for significant gifting and estate tax planning as part of the 2010 Tax Act (Click Here to Read). That opportunity is scheduled to expire at the end of 2012. But wait, it may be sooner than that.
As you probably already know, Congress recently formed a “Super Committee” (12 members of Congress evenly split between Democrats and Republicans). That Committee is charged with the task of finding $1.2 to $1.5 trillion in debt savings over a ten-year period. If reductions cannot be agreed upon by November 23, $1.2 trillion in spending cuts automatically kick in.
Word spread this week that some members of the Committee are suggesting changes to the estate and gift tax portions of the 2010 Tax Act effective January 1, 2012, including the following:
- Reducing the gift tax exemption from$5 Million to $1 Million.
- Reducing the estate and GST tax exemption from$5 Million to $3.5 Million.
- Increasing the maximum gift, GST and estate tax rates from 35% to 45%.
- Eliminating the use of several estate planning strategies, such as GRATs (Grantor Retained Annuity Trusts) and discounts for family transfers.
There are even rumors that some members of the Committee would like to make these changes effective November 23, 2011.
While it remains to be seen what actions the Committee will recommend and Congress will ultimately take, if you are intent on taking advantage of the previously reported “window of opportunity”, you may not want to wait until next year. Our attorneys continue to monitor these developments. Should you have questions about your planning needs or recommendations for year-end planning, please contact one of our estate planning attorneys: Craig W. Wendland, Mark E. Utz, David M. Pederson, or Christopher C. Wendland.