By Joseph Goldman, Esq.
The Tax Relief Act of 2010 (TRA 2010) made major changes to the federal estate and gift tax laws. These include increasing the exemption amount to $5 million ($5.12 million in 2012) for estate tax, gift tax (no more $1 million limit on lifetime gift tax), and generation-skipping transfer tax, decreasing the tax rate to 35% and adding “portability.” The changes allow taxpayers to take advantage of gift-giving strategies that could result in substantial tax savings for their families. Even for individuals who have a Will, failure to review their estate plan may cause their estate to be disposed of contrary to their wishes and may also result in unnecessary tax liability. Individuals should also review their estate plan in light of changes to their family and financial situation that have occurred since their estate plan documents were executed. But time is of the essence! The changes made by the TRA 2010 are currently set to expire at the end of 2012. As of January 1, 2013, the exemption is scheduled to decrease to $1 million and the tax rate is scheduled to increase to 55%.