As you probably recall, we were saved at the last minute from going over the much talked about “Fiscal Cliff” when Congress and President Obama came to a compromise. Several taxes were raised on higher income Americans, including income and capital gains taxes. Estate taxes appeared to have been somewhat insulated from the move to tax the assets of the wealthy. While the overall top rate was increased from 35% to 40%, the exemption rate stayed at $5 million, indexed for inflation. This was touted as a “permanent” estate tax. Well if you have ever wondered how long permanent is in Washington D.C. terms, apparently it is about 4 months.
On April 11, 2013 Bloomberg published an article about President Obama’s proposed budget for 2014. In this proposed budget, the President has recommended that the estate tax exemption be lowered to $3.5 million with a top tax rate of 45%. Additionally, he proposed to cap the amounts individuals can accumulate in a retirement account. The biggest hit is that he is also proposing that inherited retirement accounts be distributed over 5 years rather than over the beneficiaries lifetime. While these are just proposals it illustrates how critical it is to ensure your estate plan is done properly and is flexible enough to adapt to potential changes. When planning your estate you cannot plan for the laws and tax rates of today. If history tells us anything they are anything but permanent.
Contributed by MH Cave Creek, Scottsdale and Phoenix Estate Planning Attorney West Hunsaker
About Morris Hall:
At Morris Hall, we have focused our legal practice on estate planning for over 40 years. Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects. We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead. Contact us today at 888.222.1328 to schedule an appointment!
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.
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