Q: What is being considered in the area of estate and gift tax?
A: A lot! Both the tax rates, as well as the lifetime exemption amount for estates and gifts are under consideration. Currently, estates have a maximum tax rate of 35 percent. However, if no changes are made, these rates go up to 55 percent beginning in 2013. Also, the current lifetime exemption from estate and gift taxation is $5.12 million. Without new legislation, the exemption for both gift and estate tax purposes will drop to $1 million in 2013. In addition, several of the methods to transfer assets to subsequent generations at reduced values are being attacked, such as the use of defective granter trusts, and discounts associated with the use of family limited partnerships.
Many taxpayers are working with their attorneys and accountants to determine the most effective ways to transfer assets to take advantage of the possible increase in estate and gift taxes before the end of the year. The current annual exclusion of $13,000 is scheduled to increase to $14,000 beginning in 2013.
PAULA BURKES, BUSINESS WRITER