Wednesday, March 6, 2013

After Years, Tax Law Improvement

We did not think we would ever have reason to compliment federal politicians in our column.  But it would be rude to fail to give credit when it is due.  

Of course, there is plenty to criticize with the fiscal cliff action taken by Congress on New Year’s Eve/Day at the beginning of this year.  But there is one aspect of tax law that is now a little different – in a good way. 

Estate taxes (sometimes called death or inheritance taxes), have been important to what we do and talk about every day with our clients.  And the New Year’s fiscal cliff law means that we will rarely have to explain it in detail to most clients anymore, and definitely not every day.

As background, if Jack’s mom had died in 1996, he would have been required to file a complicated estate tax return called a Form 709 and paid a 40-55% tax on any amount she had had over $600,000.  In 2001, the amount was raised to $1 million and was $3.5 million in 2009. 

In 2011, it was scheduled to drop back to $1 million.  They fiddled with a 2-year fix in December 2010, which raised the limit to $5 million until January 1, 2013, when it was again scheduled to drop back to $1 million. 

On January 1, this fiscal cliff deal gave us a ‘permanent’ limit of a bit more than $5 million, which will be inflation-adjusted yearly without further acts of Congress! 

We are delighted to have our everyday client conversations changed by this latest law.  For advice figuring out how this law change could remove old restrictions from your own estate plan, call our office at (815) 436-1996 for an appointment.  © 2013 Gruber Law Office, Ltd.


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