Changes to Estate Planning in 2013

At the end of 2012, people were worried that the fiscal cliff would bring a lot of tax increases to investments, income, and will see the end to unemployment benefits extensions for people who have been hit the hardest by the economic downturn.  The reason that the issues have not been rectified is because the US states government has been running a deficit.  A little talked about aspect of the fiscal cliff is the changes to estate tax and how that will affect estate planning in years to come.

Current estate taxes until the end of 2012 take 35 percent of the assets which are passed onto successors.   That is after a limit of $5 million for individuals or $10 million for couples is met as the current exemption.  If Republicans and Democrats are unable to agree to new measures, then that rate will increase up to 55 percent after the first million.  Obama has proposed a tax of 45 percent and a middle ground of a $3.5 million exemption.

At the 11th hour, Republicans and Democrats agreed to a partial fix to the massive tax increases of the New Year.  The estate tax rate will rise from 35 percent as it was in 2012 up to 40 percent in 2013 and on.  That increase is tempered to a degree by allowing the exemptions to rise over the years with inflation.  The exemption level is still $5 million for individuals and $10 million for couples before the increases.

When planning for your estate, it is imperative to know the current tax laws which can decrease your legacy.  The best way to ensure the safety of your assets is by working with a legal professional.  Contact a knowledgeable estate planning attorney in DuPage County who can help you understand the effects of new tax rules.