Obama Administration’s 2013 Budget: Estate Tax Planning Changes
Posted May 14, 2012
The Obama Administration recently released its 2013 budget proposal, which calls for a decrease in the estate tax exemption level and an increase in the top rate that beneficiaries must pay.
Americans with complex estate plans have experienced plenty of uncertainty with federal estate tax planning in recent years. The susceptibility of a particular legacy to taxation can have significant implications for an individual’s decisions to use living trusts, marital trusts and other estate planning strategies to protect assets for heirs or charities.
The Obama Administration recently released its 2013 budget proposal, which calls for a change in the estate tax exemption level and the top rate that beneficiaries must pay. The White House seeks to decrease the exemption level from $5 million to $3.5 million, and the top estate tax rate would rise from 35 percent to 45 percent, significant changes from 2012.
Some commentators are looking at this proposal as a reduction in estate tax obligations, as the default rate, triggered if federal lawmakers do not act, would revert to $1 million and more than 50 percent. But the significance for individuals and couples with significant assets to consider is worth noting, whether they have yet to finalize estate plans or need to consult with an estate planning lawyer to implement necessary updates.
On the other side of the aisle, the budget recently passed by the House does not specify estate tax figures, but these details will begin to emerge as revenue bills are considered later this year. Rep. Paul Ryan’s budget plan, the blueprint for House Republicans, rejects the President’s call to raise taxes and chides politicians of all stripes for the current tax code instability. Meanwhile, Republican presidential front-runner Mitt Romney has staked out his position for elimination of the so-called “death tax.”
Anticipating the Implications of Changing Laws and Financial Circumstances
Changes to federal estate taxes are just one of the many complexities of the estate planning process. A wills and trusts lawyer must advise clients based on changing federal and state laws, the latest interpretations from the courts and evolving financial circumstances.
By implementing diverse strategies such as special needs trusts and pour-over wills, Michigan estate planning clients can achieve their goals for securing a future legacy and maximizing their contributions to future beneficiaries.
Article provided by Prince Law Firm
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