New Year’s Present: ATRA 2012

Congress gave us all the lovely New Year’s gift of a new tax act.  For most taxpayers it’s a wonderful gift that will change the face of planning.  For the very wealthy, it dashed all hopes of the “death tax” disappearing.  The name for the new law, the American Taxpayer Relief Act of 2012, known by the simple acronym “ATRA,” belies the complex implications to the estate planning process and profession.  The face of estate planning has been forever changed.  Key elements include:

• -Inflation-indexed exemption of $5 million ($5.25 million in 2013) for federal estate, gift and generation-skipping transfer taxes;
• -Portability of the federal estate tax exemption between spouses; and
• -For the first time in more than a decade, the changes are permanent; that is, they have no explicit expiration dates. So while on the surface the law looks much akin to what we’ve had since the 2010 tax act, the permanence of the rules changes everything.

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