Looming Estate Tax Problem


This is something you shouldn’t ignore.

I don’t always stay current with planned giving strategies and issues, but I was talking with a colleague and friend this week who shared information about a pending predicament for elders who have estates valued at $1 million or more. Basically, on January 1, 2013 the estate tax exemption is set to drop from around $5 million to $1 million (assuming Congress doesn’t act, which is a safe bet) and the estate tax rate is going from 35% to as high as 55%. Bottom line: this could have a profound effect on the taxes that your estate (and heirs) have to pay after you die.

I looked a little deeper and found this article from a professor at Ohio State University that said:

“Congress must revisit the estate tax laws before the end of 2012, otherwise we will revert to pre-2001 exemption levels. This means that on January 1, 2013, the federal estate tax exemption will drop all the way down to $1 million and the estate tax rate will jump up to 55% (Ouch). This could affect hundreds of farms, small businesses and recipients of oil & gas lease payments.”

Full article here.

My colleague has developed plan for seniors age 70-85 to restructure their income and assets to avoid their heirs having to pay a big chunk of their inheritance in Federal taxes.

You probably know someone or have a board member or two that this might impact. If you’d like to know more, send me a message.

Are you aware of the pending change? Are you preparing your board members and donors for it?

photo credit: kenteegardin via photo pin cc