Opportunity To Save $$ On Estate Taxes Expires Dec 31 2012


Henry Montag

Henry Montag

Remember President George W. Bush? Well he’s still affecting our economic lives. 

Let me explain. 

Before beneficiaries can receive any inheritance, an estate will have to pay various state and federal inheritance taxes on all assets it owns.

Then and only then will the balance of the assets be passed on to beneficiaries. This estate tax rate can be quite high. It is currently 35% and increasing to 55% after Dec 31 2012. Today one has an opportunity to make a gift to anyone and avoid having to pay both the federal and state estate tax on the first $5 Million of assets. 

So, here’s the catch, the ability to give away $5 Million will be reduced to $1 Million  as a result of the Bush tax cuts expiring on Dec 31 2012. So as you can surmise, the next 4-1/2 months will provide the most unprecedented opportunity for individuals to to save the tax on up to $4 million dollars of their estate tax liability. 

My advice is this: if you’re in a position to consider making tax saving gifts to your children or grandchildren, speak to your Estate Attorney, Eldercare Attorney,  or CPA and ask him/her if the expiring Bush Tax cuts are something you can or should  be taking advantage of to reduce your estate tax liability. If the answer is yes I suggest that you call your family together in what we call a “Family Conversation” to advise your family members of your intentions. In addition to gifts to family members, keep in mind you can also consider a host of other charitable gifts that will accomplish the same objective, and may even be useful in reducing your current income taxes as well. 

Before you consider giving, or anyone suggests that you consider giving away any assets, make certain that you have guaranteed a sufficient flow of income for yourself. This can best be accomplished by contracting for an Immediate Annuity from a life insurance company. Such Annuities can provide a guaranteed tax advantaged monthly income personalized to fit your particular income requirements. Make sure you leave yourself sufficient time to complete this procedure as many individuals and their advisors have also waited until the last minute to try to complete these types of transactions, and all are working against the same deadline of Dec 31 2012. 

For further information you can either speak to your existing insurance broker, not an agent, (as an agent works for a company) while brokers are independent and work for you, or you can contact me with any questions at the email address below.            

Henry Montag CFP,CLTC
Web site           www.financialforumsinc.com
Email                henry@financialforumsinc.com 
Phone                516 640-1315


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