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  • Estate Planning Uncertainty in an Election Year

    Tax laws have a direct and substantial influence on your estate plan. During an election year, such as this year, the fate of many tax laws is typically unpredictable. Setting up an evaluation of your present estate plan with your estate planning lawyer is a good way to make sure that your plan makes the most of the present tax laws and expects any scheduled modifications.

    A modification in administration might lead to a change in philosophy with regard to tax laws. As the tax laws currently stand, there are a number of them that are set to end or change for 2013 consisting of the following:
    Investments: The maximum rate for long-term capital gains could increase to 20% from 15% unless Congress acts before completion of the year. Stock dividends, currently taxed at an optimum of 15%, will likewise be taxed as regular earnings, with a leading tax rate of 39.6%

    Estate Planning Uncertainty in an Election YearEstate Tax Exemption: Currently at $5 million, the exemption is scheduled to hang back down to $1 million next year in 2013.
    Gift Tax Exemption: Also presently at and all time high of $5 million and set to return to $1 million in 2013.

    Estate Tax and Present Tax Rates: Currently set at an optimum of 35%, both will revert to an optimum rate of 55% on January 1, 2013 missing action by Congress.
    Payroll Tax Cut: Adds about $40 to the average employee’s take house pay. Congress extended the tax cut through 2012, but its future is uncertain.

    Tax Rates: President Bush carried out a tax rate cut that is still in effect putting the rates at 10% – 35%. If they expire, private tax rates will go back to 15% – 39.6%.
    Alternative Minimum Tax: The AMT was initially intended to prevent high income taxpayers from preventing taxes; nevertheless, it was not indexed for inflation, resulting in more taxpayers being needed to use the AMT over the years. A “spot” has been utilized by Congress each year to repair this, however the “patch” does not extend to 2012 at this time. As lots of as 31 million taxpayers are expected to be impacted if another Patch is not forthcoming.

    Tax Reductions and Credits: Many short-lived reductions and credits have actually been adopted to help ease the monetary tension of the economic downturn. There is no warranty that these will be extended.

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