Estate Planning in 2013

As previously discussed, the American Taxpayer Relief Act, H.R. 8 (the “Act”) extended the unified estate, gift and generation-skipping transfer tax exclusion amount of $5 million indexed for inflation ($5.250 million in 2013) effective Jan. 1, 2013. The Act made the portability election permanent, which allows the surviving spouses to take advantage of their deceased spouse’s unused federal estate tax exemption amount or “DSUEA” and increase their estate tax exemption by such DSUEA. These are two very powerful tools for estate planning and your documents should be reviewed in light of these changes.

For example, the increased estate, gift and generation-skipping transfer tax exclusion makes a typical estate tax planning trust unnecessary for most married couples. With a combined estate, gift and generation-skipping transfer tax exclusion of $10.5 million per married couple, the married couple’s trusts should be reviewed to simplify the administration at the first spouse’s death as these trusts may not be necessary for estate tax purposes.

Important: You should contact your attorney or advisors to discuss your current estate planning documents to determine whether changes should be made.