As our clients know from our prior alerts, the last few years have seen unprecedented changes in the federal tax on gifts and bequests. One element of this was the unexpected increase in the federal gift and estate tax exemption (the “applicable exclusion amount”) in 2011 to $5,000,000 per person. Another element was the reduction in the maximum tax rate—to 35%—for gifts or bequests in excess of that exemption. These were temporary two-year features applicable to 2011 and 2012 and are scheduled to “sunset” at the end of 2012, at which point the estate and gift tax exemption and rates will revert to levels from more than a decade ago, namely: a $1,000,000 per person exemption and a top tax rate of 55%.

Please see full alert below for more information.

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Topics:  Charitable Lead Annuity Trust, Gift-Tax Exemption, Grantor Retained Annuity Trust, Intentionally Defective Grantor Trusts, Qualified Personal Residence Trust, Year-End Planning, Year-End Tax Planning

Published In: Tax Updates, Wills, Trusts, & Estate Planning Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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