Tax Law 2012: A window Of Opportunity?

July 1, 2012

By Ben Hartman, HunterMaclean

Special to Elegant Island Living

Shifting political and tax landscapes are closing an important window for favorable estate planning opportunities.

The estate and gift tax has been relatively predictable for many years, but recently the tax rates have been in major flux. As a result, residents of Brunswick and the Golden Isles may want to take advantage of a significant window of opportunity that may soon close.

It’s important for individuals and businesses to align themselves with qualified estate planners who can minimize the impact of the impending estate and gift tax legislation changes on both business succession plans and financial well being. Now more than ever, lack of foresight can adversely affect a lifetime of financial gains.

The estate and gift tax compromise that was signed into law in 2010 included a $5 million gift and estate tax exemption per individual or $10 million for a married couple without regard to the “deceased spousal unused exclusion amount.” Any assets exceeding that amount are taxed at a 35 percent rate. However as of January 2012, the current $5 million gift and estate tax exemption has been indexed for inflation, increasing the exemption rate to $5.12 million per individual.

In addition, for gifts made after December 12, 2010 the lifetime exclusion limit unifies with the estate and gift tax rate at $5 million, as well as providing for portability, which eliminates the need to establish a marital-family trust to ensure that heirs receive the benefit of both spouse’s estate tax exemptions. It also allows aggregate gifts of up to $5 million per Donor during life without a current gift tax due.

As it is currently scheduled, the Tax Relief Act of 2010 that established the current estate and gift tax rates is set to expire on January 1, 2013. This means that unless Congress changes the law, the tax rate exemption will decrease from $5 million to $1 million and increase the top rate from 35 percent to 55 percent.

If the Bush Tax Cuts are “rolled back”, the effect on the family of a married couple worth $4 million would be a tax liability of $1 million. That is $1 million to the Federal Government rather than children, grandchildren or charities. This tax can cripple a closely held family business as it is due within nine months of death.

Because of the high exemption rates for 2012, you should examine planning opportunities currently available. Without a new tax legislation that would have to come from the gridlocked federal government in the midst of a spirited election, this window will close on December 31, 2012

Estate planning attorneys can help devise strategic solutions that will work best for your long term plans. There are many tools available that will help minimize your future estate tax liability. Proper planning can result in significant savings.

Because of the many variables affecting estate planning this year, make sure to discuss your options with an attorney. Careful planning this year could make an appreciable difference in your ability to transfer wealth to your loved ones this year and in the future.


Ben Hartman is a partner at HunterMaclean’s Brunswick office who specializes in estate planning and fiduciary law. He can be reached at or 912.262.5454.

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