(PRWEB) November 02, 2012
The Law Firm of Pozzuolo Rodden P.C., Estate Planning Attorneys, Philadelphia, PA, announces the release of the article: "The Season Of Tax Uncertainty-Federal Estate Taxes For 2013 And Onward.". Below is a sample of the first couple of paragraphs. If you would like to read more, please read the full article and other corporate law, or estate planning topics at http://www.pozzuolo.com/Pubs_Newsletters.shtml
The Season Of Tax Uncertainty-Federal Estate Taxes For 2013 And Onward
For Federal Estate Tax Planning, we are in an even more uncertain place than we were 2 years ago. Not only are we waiting and watching on what will be done with the Federal Gift and Estate Taxes (the "Transfer Taxes"), but now with the pending elections we are waiting on whose administration will be deciding these tax issues- another level of uncertainty. As of January 1, 2013, the Estate, Gift, and Generation Skipping Tax Exclusions would drop from the current $5,120,000 to $1,000,000, the spousal portability is lost, and the maximum marginal tax rate will increase from 35% to 60% (taking into account the 5% recuperation from $10,000,000 to $17,184,000). This would greatly increase the Federal Transfer Taxes payable by many estates, large and modest, that have not been taxed since prior to year 2001. Please consider that most center city and suburban residents have estates in excess of $1 million when you consider a home, a pension and a life insurance policy.
2012 and 2013:
The 2012 TRUIRJCA rules postponed the sunset of the favorable EGTRRA rules. EGTRRA provided an Estate Exclusion of $5,120,000, a Gift Tax Exclusion that matches the Estate Exclusion, a marital portability of the exclusions, and a maximum estate tax rate of 35%. This is scheduled to drastically change on January 1, 2013. By way of background, first, the Estate and Gift Tax Exemptions at $5,120,000 allow for a tax free wealth transfer opportunity for most estates. Second, there is presently a portability of the exemptions between spouses. A surviving spouse is permitted to use any unused exemption of a predeceased spouse if the predeceasing spouse's executor makes the proper election on the deceased spouse’s federal estate tax return. This is important if one spouse owns the majority of the assets and the less wealthy spouse dies first; otherwise, the exemption is lost. Under portability, an asset owning surviving spouse may now use the unused exemption to receive a total exemption of $10,240,000. Finally, while the pre-EGTRRA maximum tax rate was 60% (55% plus the 5% recuperation from $10,000,000 to $17, 184,000) the TRUIRJCA capped the federal tax rates at 35%. This provides substantial opportunities to gift or bequest assets out of an estate tax free or at tax preferred rates. In 2013, this is to sunset. The exemption will drop back to $1,000,000, there is no spousal portability, and a potential maximum marginal tax rate is 55% to 60%. The lower exemption rate would mean a potential additional $8,000,000 of assets per married couple being taxed at a higher rate. That in itself could cause an increase tax bill as much as $4,400,000 (55% * $8,000,000) not including the effect of a higher tax rate on amounts above $10,000,000. Further, no spousal portability means if a married couple owns $2,000,000 of assets, but the wife is the sole owner of the assets, if she was the second to die, she could not use her husband’s $1,000,000 exemption amount. This would result in an extra $43,000 of federal estate taxes not taking into account the effects of the lower exemption amount. Last, the higher marginal tax rate of 60% is almost double the marginal federal estate tax rate of year 2012........
If you would like to read more, please read the full article: "The Season Of Tax Uncertainty-Federal Estate Taxes For 2013 And Onward" and other corporate law or estate planning topics at http://www.pozzuolo.com/Pubs_Newsletters.shtml
Pozzuolo Rodden, P.C. provides specialized cost-effective legal services to privately held business owners and high-net-worth clients in Pennsylvania and New Jersey in excess of 35 years.
Business planning and transaction, complex business litigation, commercial real estate and development, construction law and litigation, advanced estate planning and administration, tax and pension law, high profile and intricate family litigation, and employment law and litigation.
Pozzuolo Rodden, P.C.
Counselors at Law
2033 Walnut Street
Philadelphia, PA 19103