Personal Planning Strategies - September 2012

Use It or Lose It - Increased Gift and GST Exemption Amounts Expire on 12/31/12

On December 17, 2010, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the "2010 Act") was signed into law, making significant modifications to the estate, gift and generation-skipping transfer ("GST") taxes. The 2010 Act:

• reduced the estate, gift and GST tax rates to 35%.
• increased the estate tax exemption from $3.5 million to $5 million.
• increased the GST tax exemption from $1 million to $5 million.
• reunified the estate and gift tax exemptions so that an individual can gift up to $5 million during life.

Unfortunately, these favorable provisions of the 2010 Act will remain in effect only through December 31, 2012, when the act is scheduled to sunset. Unless the law changes, in 2013, the law reverts to the 2001 law, and the top gift and estate tax rate will be 55% and the estate and gift tax exemptions will be $1 million. In addition,