The recently enacted American Taxpayer Relief Act of 2012 (ATRA) provides significant opportunities to engage in meaningful tax planning for large estates, much like the tax law of recent years. The gift, estate and generation-skipping transfer (GST) tax exemption amounts have increased in 2013, together with the top tax rates. Among other things, ATRA specifically provides:

  • $5,250,000 of gift, estate and GST tax exemption per person ($10,500,000 per couple, indexed for inflation in subsequent years);
  • a top tax rate of 40% (up from 35% in 2012);
  • a gift tax annual exclusion amount of $14,000 per year per person (indexed for inflation in subsequent years); and
  • portability rules allowing a surviving spouse to use his or her deceased spouse’s remaining gift and estate tax exemption amount (during the surviving spouse’s life or at his or her death).
Unlike the tax law of recent years, these and most other ATRA provisions are not scheduled to sunset (i.e., they are “permanent”). However, it is possible that even some “permanent” provisions of ATRA may change as early as this year as part of comprehensive tax reform and deficit reduction legislation. Because of this possibility, and because of the favorable tax laws and unprecedented low interest rates (see Applicable Federal Rates), anyone contemplating a transfer of property should consider making the transfer soon.

Please contact one of our attorneys if you would like to learn more about ATRA, wealth transfer or any other issues relating to tax, estate and/or charitable planning. We can be reached in our Boise office at 208-639-7799 and in our Seattle office at 206-652-0101.

To ensure compliance with requirements imposed by the U.S. Internal Revenue Service, we inform you that any tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding tax-related penalties under the U.S. Internal Revenue Code, or (2) promoting, marketing or recommending to another party any tax related matters addressed herein.