How do the election results affect my estate planning?
Unless you’ve been living under a rock this week, you’ve probably heard that President Obama got re-elected on Tuesday night. People across the country are guessing how the election will affect their lives for the next four years. That includes any plans you may have made for your estate after you pass away.
As things stand now, for most of my clients, nothing will change. The basic documents you’ve prepared have been drafted in accordance with state laws, and those aren’t likely to change soon. The biggest change we are facing is in the world of estate taxes. For people passing away this year (2012), they can pass $5 million free from estate taxes. Married couples can combine their exemptions fairly easily to bring the total up to $10 million.
However, you may have heard of the “fiscal cliff” that the U.S. is facing on January 1, 2013. The fiscal cliff refers to the automatic increase in tax rates in all types of taxes for virtually all taxpayers. This includes estate taxes. As the law is written now, if you were to pass away in 2013, you could only pass $1 million free from estate taxes. Although many people don’t think they have to worry about that, your estate for the purposes of estate taxation includes life insurance, 401k’s and IRAs, and other assets you may not have considered.
What will happen with our tax rates is anyone’s guess. President Obama has indicated that he would like the exemption to drop to $3.5 million, but that’s not certain to happen. If you are worried about what will happen with your estate and estate taxes in 2013, call Sarah White, Marietta estate planning attorney, at 678-453-6490. I will be happy to talk to you about any steps you can take to minimize the damage.