Thursday, November 8, 2012
Congress probably will not act soon enough to stop the $5 million estate and gift tax exemption from going back to $1 million in the new year. However, this does not necessarily mean that clients only have 7 more weeks to take advantage of this planning opportunity.
Thomas Pauloski, national managing director of Alliance Bernstein's Wealth Management Group, predicts that Congress will come up with less dramatic increases to the estate and gift tax provisions in the first nine months and make them retroactive to Jan. 1, 2013.
With this in mind, Mr. Pauloski recommends setting up an irrevocable grantor trust before the end of the year and funding it with the maximum $5 million for an individual or $10 million for a couple. Ideally, the trust should be funded with assets that are easy to value, such as cash and stock. Next year the trust can buy assets that are more difficult to value.
See Liz Skinner, Estate Department: Inheritance Tax Changes Likely to Be Retroactive, InvestmentNews, Nov. 8, 2012.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.