The recent extension of the Federal Estate Tax that raises the exemption to $5 million until 2012, with a maximum rate of 45%, does little to aid in planning an estate. With the acrimony in Congress surrounding the extension, there is little doubt that such will be repeated in the final months of 2012, the outcome largely dependent upon the success of the current Congress to effectively address the economic picture facing the country and the world. Unless the extension continues, the exemption would be reduced to $1 million with a maximum rate of 55%.
Citizens whose estates may be impacted by the Estate Tax should not simply through up their hands. Rather, it may make sense to plan with alternative outcomes designed to go into effect, depending upon what the Congress may do. Such plans will require the cooperative effort of both attorneys and tax accountants and will, likely, not be available “off the shelf.” Each plan should be drafted and crafted to meet the the specific intentions of the client and the perceived needs of his or her family. Such plan should also reflect the current increase in the gift tax exemption, from $1 million to $5 million, exemptions that, like the estate tax, may only continue until 2012.