More to Gain, More to Lose

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An Estate Planning Update: How the American Taxpayer Relief Act of 2012 Can Change Your Estate Plan

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More to Gain, More to Lose

  1. 1. More to Gain, Moreto Lose { An Estate Planning Update: How the American Taxpayer Relief Act of 2012 Can Change Your Estate Plan Peter V. Arcese, JD, MA, LL.M (Tax) Estate Planning & Mediation 11 Broadway, Suite 615, New York, NY 10004 (646) 261-1200, peter@pvacounsel.com
  2. 2.  Maximum Estate & Gift Tax Rate increased to: 40%.  Estate Tax Applicable Exclusion for 2013: $5,250,000.  Reunification of Estate and Gift Tax rates and applicable exclusion amount.  “Portability” of the deceased spouse unused exclusion (DSUE) remains available.Be aware that …
  3. 3.  Fewer estates than ever will be subject to Federal Estate Tax.  State Estate Taxes may still be imposed & affect planning.  E.g. in New York State, a $5,250,000 estate which is free of Federal estate tax, would incur a state tax of: $420,800 without proper planning.Beware …
  4. 4.  Portability allows for spouses to potentially maximize use of their applicable exclusion without the use of trusts.Be aware that …
  5. 5.  Portability depends on an Executor being appointed, filing a federal estate tax return, and making an election.  The amount of unused exclusion depends on the amount remaining from the “last deceased spouse.”  Portability will not protect assets from tax on appreciation during the survivor’s lifetime.  Portability will not provide the asset protection and management advantages of a trust.Beware …
  6. 6.  Estates & trusts reach the highest Income Tax Marginal rate with income of $11,950.  The rate on ordinary income is: 39.6%.  The rate on capital gains is: 20%.Be aware …
  7. 7.  Income tax planning is now a key element for reducing the tax consequence associated with the benefits of estate planning with trusts.  Estates & trusts may also be subject to the new 3.8% “Medicare” surtax, resulting in a marginal rate of 43.4%Beware …
  8. 8.  Charitable Remainder Trusts can help reduce, defer, or eliminate capital gains &/or the 3.8% surtax.  Direct contributions from an IRA to a charity by donor’s over 70 ½ years of age are still available for 2013.Be aware …
  9. 9.  peter@pvacounsel.comQuestions?

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