The good news is that the New Year’s day passage of the American Taxpayer Relief Tax Act Of 2012 or ATRA ended 12 years of uncertainty about how much could pass tax free; what the tax will be on transfers above that amount; and even whether there would be an estate tax at all.
What’s still in play are the cute tax tricks that some of the best minds in the field have devised to leverage or pack more into the tax-free amount.
Americans can rest easy now that the fiscal cliff debacle is over. But some professionals have started to realize that there were some very real questions left on the fiscal cliff table as it relates to key “tax tricks.”
While significant estate planning laws are settled, there remain more than a few important estate planning “tools” left hanging in the air. These tools likely will be low-hanging fruit in future discussions.
The American Taxpayer Relief Tax Act Of 2012 (ATRA) finally ended some 12 years of estate planning uncertainty (or so we can only hope). The certainty includes such matters as various tax rates and the exemptions amounts for the estate tax, gift tax, and generation-skipping tax. But ATRA didn’t settle many technical questions raised in the past few years, both on and off the campaign trail.
So, what issues and devices should we watch? A recent Forbes article titled “Congress May Tighten The Belt On Cute Tax Tricks” lists some sore subjects and possible new areas of taxation. These include:
- Grantor Trusts: might just get added back into the Grantor’s estate.
- Dynasty Trusts: might just limit the extent of your dynasty.
- GRATs: “Grantor Retained Annuity Trusts” (GRATs) might become much more demanding and risky.
- Family Limited Partnerships: might become much less valuable as your ability to take discounts is curtailed.
The original article is worth your time, especially if you are concerned that future technical rules may swoop in and sully some well-designed estate planning. However, for those conversant with this subject, they will recognize that this talk is nothing new and these estate planning devices have been repeatedly targeted in the past.
Be sure to consult qualified legal counsel if you have questions about how future changes in the law may impact your estate planning.
Reference: Forbes (January 16, 2013) “Congress May Tighten The Belt On Cute Tax Tricks”
Holden Campbell, LLC - Annapolis Estate Planning Attorneys