“Many advisers see this year’s changes as providing a two-year window to plan for higher taxes that may be coming when lawmakers tackle deficit issues. This is especially true for investors with large capital gains or those who would owe gift and estate taxes, who have far more ability than wage-earners to time their taxes. Capital gains, gift and estate taxes also are at historic lows, so they could rise more steeply. Already a new 3.8% tax on investment income kicks for those earning over $250,000 in 2013 ($200,000 for singles) to finance the health-care overhaul. The new estate and gift tax is especially well-suited to those trying to plan around future tax increases. For the first time, one $5 million per-taxpayer exemption applies to estate, gift and generation-skipping taxes. Lawmakers didn’t restrict leveraging techniques, such as Grantor-Retained Annuity Trusts, that enable taxpayers to give away many times in real value the nominal amount of a gift. With proper planning over the next two years, says attorney Joshua Rubenstein of Katten Muchin Rosenman LLP, “Almost no one needs to pay estate tax unless they want to.”
New Estate Tax . . . “Almost no one needs to pay estate tax unless they want to.”
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