At the end of 2010 congress revamped the estate tax and generation skipping tax legislation. This saw all of the different types of death related taxes being filed with the highest rate of 35%.
At the moment the exemption rates are very generous and this is thought to continue throughout 2012. However, in 2013 it’s likely that things will be changed. That’s why many New York Probate Lawyers are starting to tell their clients about the possibility of gifting now.
The portability of the gift tax exemption means that a married couple actually has double the amount of exemption. The $5 million lifetime gift tax exemption for individuals is $10 million for a married couple. In 2010 the gift exemption was only $1 million.
So many people are asking their Lawyer whether they should start giving away as many of their possessions to their children before 2013 and the exemptions are reduced. This would serve to reduce the inheritance taxes explains the New York Probate Lawyer.
These lifetime gifts will help to reduce the size of your estate which will in turn mean that less tax will need to be paid. They will also earn interest at their capital gains tax rate which could be beneficial.
If you do want to use the portability of these exemptions then you will need to file an estate tax return. This is important even if there is no tax owing. This will also serve to notify the IRS that you will transfer the gift tax exemption to the surviving spouse.
The estate tax return needs to be submitted 9 months after the death, although it may be possible to extend it by six months in some circumstances.
The savings could be very high if you start gifting assets now. However, the problem is that there’s no indication what will actually happen in 2013 in sites like Suffolk and Westchester Counties. Congress could continue with the $5 million individual exemption into 2013, nothing is sure. However, if congress reverts back to $1 million lifetime gifting limits then you would have saved a lot of money.
A New York Estate Planning Attorney will be able to assist you draw up your will and answer any questions you may have. A New York Estate Planning Attorney will help your family to reduce the inheritance tax they are liable to pay by as much as possible.