Perhaps Benjamin Franklin said it best back in 1789, "In this world nothing is certain but death and taxes."
While we can't be certain what Congress will do in regard to tax law, you should be aware of the following scheduled changes as we move into 2013, and review and prepare your estate plan now if you may be impacted.
- Estate and generationskipping taxes revert to 2001 law. The estate and generation-skipping tax the shift of property by gift or at death to a person who is two or more generations below that of the person granting the gift (GST) exemptions will change dramatically in 2013. The basic exclusion amount the amount you can own before your estate is subject to estate taxes decreases from $5.12 million in 2012 to $1 million in 2013. The highest estate, gift and GST tax rate also increases from 35 percent to 55 percent. That means, for every dollar you own more than the $1 million exemption, as much as 55 percent may be subject to federal estate taxes upon your death. The changes will cause more estates to pay estate taxes.
- Portability ends. For 2011 and 2012, if one spouse died without using up his or her federal estate tax exemption, the unused portion could be transferred to the surviving spouse. This is called a portability provision. In 2013, however, portability between spouses ends.
- Gift tax exemption is reduced. The gift tax exemption is reduced from a $5.12 million exclusion amount unified with the estate tax exemption to $1 million in 2013. The top gift tax rate will rise from 35 percent to 55 percent. The annual gift tax exclusion the amount you can give to anyone gift tax free each year remains at $13,000 ($26,000 for married couples).
- Capital gains and income tax rates increase. The maximum tax rate on capital gains will increase from 15 to 20 percent and the top income tax rate on ordinary income will increase from 35 percent in 2012 to 39.6 percent in 2013. The maximum income tax rate on qualified dividends will increase from 15 to 39.6 percent.
Many of us use our estate plans to make the world a better place for our family and community. In light of these potential changes, now may be the best time to review your plans with your estate planning attorney to make sure your wishes are met.
If you'd like more information about making a lifesaving gift to Lee Memorial Health System, please visit www.LeeMemorial.org/Foundation and click on "Ways to Give" or contact Linda T. Kelly of the Lee Memorial Health System Foundation at Linda.Kelly@LeeMemorial.org or 239-343-3797.
Golisano Children's Hospital of Southwest Florida Capital Campaign