Quinn DeAngelis, P.C.
Kierland Business Center
15849 N. 71st Street, Suite 100
Scottsdale, Arizona 85254
ESTATE PLANNING UPDATE
1. 2012 Annual Gift Tax Exemption: $13,000 per donor, per donee.
2. Temporary 2012 Gift and Estate Tax Exemption: $5,120,000 per donor; Exemption scheduled to return to $1,000,000 per donor after December 31st.
3. Marital Deduction for Transfers to U.S. Spouse: Unlimited.
4. Temporary 2012 Generation Skipping Tax Exemption: $5,120,000 per donor; Exemption also scheduled to return to $1,000,000 per donor after December 31st.
5. Top rate for Federal Estate, Gift and Generation Skipping Taxes: 35% through 2012, 55% thereafter.
6. Federal Legislation: Unless extended at the end of this year, the estate, gift and generation skipping tax benefits of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 all expire at the end of 2012. Most commentators suggest three likely scenarios for Congress: (a) do nothing and let the exemptions return to their 2002 amounts; (b) extend the 2012 temporary exemptions and rates; and (c) repeal the estate tax entirely. At this time I anticipate that we will see an extension of the temporary exemption amounts soon after the election in November.
7. State Legislation: Other than the Arizona Trust Code which became effective January 1, 2009 and a few cases clarifying creditor’s rights to assets in trust, there have been few material changes in Arizona law. Therefore, only revocable trusts prepared prior to 2005 should be reviewed. If you have not reviewed your plan since 2005, please contact me to schedule a review.
8. Planning Opportunities: If you are planning a transfer of wealth at any time in the next ten years, now is the time to at least review your alternatives, especially for individuals with current estate of more than $5,000,000 or couples with estates of more than $10,000,000. The temporary exemption amounts, low valuations and the low IRS rate tables for July setting the minimum amount of interest (mid-term rate is less than 1.0%) and discount rate used to value annuities (7520 rate is 1.2%) make outright gifts, gifts in trust, grantor retained annuity trusts, charitable lead trusts and sales with deferred payments extremely attractive. In certain structures you or your spouse may be able to retain a portion of the asset transferred. Depending upon a person’s desires and portfolio, there are several techniques available to reduce or defer estate tax obligations and if you are interested in exploring these options at this time, please contact me.