The American Taxpayer Relief Act

Lake Superior State University recently released its “2013 List of Banished Words” and the phrase receiving the most votes was “fiscal cliff.”  I would probably join most of you in agreeing that if anyone else “doubles down” on the folks in Washington D.C. “kicking the can down the road” on the “fiscal cliff” again I might just scream.Seriously, even though most would agree that the American Taxpayer Relief Act (ATRA) fell short of what we hoped it would be, some important things happened in terms of estate planning that you should be aware of.   The sunset provisions of the prior laws were removed and therefore, the exemption amounts for the Estate, Gift and GST taxes will remain “permanently” at $5 million indexed for inflation.  Rates do increase with the top rate moving from 35% to 40%.  Additionally, portability of the unused exemption amount to the surviving spouse has become a permanent option.Going forward, at least for now, there is some certainty for people planning their estates for the first time since 2001.  However, planning flexibility into your documents remains important as “permanent” laws are still subject to change from time to time.  Happy New Year.