There’s No Need to Fall Off the Fiscal Cliff

If Congress fails to act, 14.7 million U.S. households would have a potential estate tax liability. The average tax due for these families would be $1.4 million, LIMRA states.

As we approach the end of 2012, you may be wondering if the Bush-era tax laws will expire come 2013.  Have you done everything to ensure your estate plan will be able to survive a tumble off the tax cliff?

When it comes to the “default” 2013 estate tax, some 12.5% of U.S. households may come under the estate tax axe, according to new analysis by LIMRA. These numbers were picked up and reported by LifeHealthPRO and reported in its article titled, “LIMRA: More than 1 in 8 U.S. households may owe estate tax in 2013.

This change in the estate tax exemption limit scoops up a huge new group of taxpayers in its dragnet who otherwise might not have been subject to the estate tax axe. In fact, many in this new group of estate tax taxpayers have not previously found themselves at the top of the wealth pyramid. So, how is this possible?

If (or when) we fall off the fiscal cliff, the IRS will be forced to apply 12-year-old laws, and with them a 12-year-old estate tax exemption and its estate tax rates. In other words, the estate tax exemption will revert to $1 million from the current $5.2 million, and a 55% maximum estate tax rate will replace the current 35% rate. Yes, that’s a quite a low blow.

Remember, it’s not just your bank account that the IRS counts against your estate tax exemption, but all of your assets, to include your home and life insurance death benefits.

Unfortunately, that’s just the tip of the tax iceberg. Not only is it absolutely vital to keep track of the law, but it is essential that you know the steps to take now to protect yourself and your loved ones in the event Congress and the White House fail to act.

You can learn more about  estate tax planning  on our website. Be sure to sign up for our complimentary e-newsletter to stay abreast of issues like these that could affect you, your loved ones and your estate planning.

Reference: LifeHealthPRO (September 27, 2012) “LIMRA: More than 1 in 8 U.S. households may owe estate tax in 2013

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We've been putting together as many resources as possible so that we can continue to help:

  • If you’re a current client with a signing appointment or a prospective client with a consultation and would prefer that meeting take place in your own home, we can accomplish that with a little bit of pre-planning on our part and with the addition of a laptop, smartphone, tablet or other computer in your home to facilitate this virtual meeting. For those of you that need to sign legal documents, that too can be accomplished with the use of a webcam (FaceTime etc.), so that we can witness and electronically notarize all of your important legal documents.
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Update to our Process

The unprecedented coronavirus pandemic has taken our entire country by surprise. We understand how difficult this time is for America’s businesses and families.  However, we believe it is vitally important that we make every effort possible to continue to offer solutions that avoid disrupting our important partnership with you, your family and friends.  As you know, estate planning is not something that should wait for a more convenient time, therefore the opportunity to address your important goals both during and after this crisis should not wait.  To that end, we have added the option of a ‘virtual consultation’ to our office process.  You will now have a choice of either meeting with us in our office or in the comfort of your own home.