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Estate and gift tax cliff is looming

CLEVELAND, Oct. 10, 2012 /PRNewswire/ -- McDonald Hopkins law firm recently issued an estate planning alert regarding the possible changes to estate and gift tax slated to take place in the new year.

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Since 2010, under Federal estate and gift tax law, every individual has a tax exemption of $5.12 million assuming he or she has not previously made taxable gifts. Given proper estate planning, this exemption means a couple could shield slightly more than $10 million from tax at death. Barring a change in the tax law prior to January 1, 2013, or a retroactive change in 2013, the exemption is reduced to $1 million on January 1, 2013. Thus, a couple with a net worth in excess of $1 million could then be subject to the estate tax. Keep in mind that for estate tax purposes, net worth includes life insurance and retirement plan benefits.

While it is possible that Congress will change the exemption amount, many have, or are now considering, making gifts or transfers either outright or in trust to their beneficiaries in order to maximize their utilization of the higher exemption before year end. If Congress changes the estate tax exemption amount, it is entirely possible the gift exemption will remain at $1 million (which is where it has been in recent history despite changes in the estate tax exemption). Therefore, this would be the last year in which an additional $4 million in gifts could be made.

Click below to read the full McDonald Hopkins Law Firm Alert: Estate and gift tax looming

http://www.mcdonaldhopkins.com/alerts/alert-estate-and-gift-tax-cliff-is-looming

For more information, please contact:

Jeffrey P. Consolo
216.348.5805
jconsolo@mcdonaldhopkins.com

About McDonald Hopkins
McDonald Hopkins is a business advisory and advocacy law firm with offices in Chicago, Cleveland, Columbus, Detroit, Miami, and West Palm Beach. The firm's comprehensive legal services are provided by teams of specialized attorneys and professionals in areas such as business law, litigation, business restructuring and bankruptcy, estate planning, government affairs, healthcare, intellectual property, labor and employment, mergers and acquisitions, and more. The president of McDonald Hopkins is Carl J. Grassi. For more information about McDonald Hopkins, visit mcdonaldhopkins.com.

IRS CIRCULAR 230 DISCLOSURE: To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any tax advice contained in this communication (including any attachments), was not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding any penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any transaction matter addressed herein.

© 2012 McDonald Hopkins LLC All Rights Reserved. This Alert is designed to provide current information for our clients, friends and their advisors regarding important legal developments. The foregoing discussion is general information rather than specific legal advice. Because it is necessary to apply legal principles to specific facts, always consult your legal advisor before using this discussion as a basis for a specific action.

CONTACT:
Deborah W. Kelm
McDonald Hopkins LLC
Phone: 216.348.5733
Email: dkelm@mcdonaldhopkins.com

SOURCE McDonald Hopkins LLC