Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Monday, October 22, 2012

Warning For Clients: Less Than 90 Days To Take Advantage of the Lifetime Estate Tax Exemption

IRS 2The time for clients to decide whether they will make use of the $5.12 million estate tax exemption is fast approaching. At this time, it is uncertain as to whether Congress will act to extend the Bush-era estate tax levels. If Congress chooses to not act by the end of the year, then the exemption will return to the same level that it was at in 2001. In other words, the estate tax exemption will be set at $1 million, with a 55% tax rate on all income that exceed the exemption.

While both political parties have offered their own proposals to the estate tax problem, the political atmosphere in Washington D.C. at the moment is making it look like no decision will be reached before the end of the year, especially with the presidential election in full force. Therefore, clients might want to consider using their large exemption to make gifts, especially if that client would likely be affected by the reversion of the estate tax exemption. This is important because many households do not have the necessary life insurance policies on the life of owner of their property to pay the potential estate tax liability that they would incur on the value of their property. On average, most households in this category would likely own about $1.6 million in taxes. Thus, clients might not want to wait for Congress to act to begin taking advantage of the exemption. A client would need to act sooner rather than later because the act of making gifts and planning can take some time to complete.

See Robert Bloink & William H. Byrnes, The Ticking Estate Tax Time Bomb: Less Than 90 Days of Planning Remain, Advisor One, Oct. 16, 2012. 

Special thanks to Jim Hillhouse(Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.


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