As of this blog posting, there are 12 days left before the clock strikes midnight on December 31st and the law changes.
It’s just like watching the ball drop in New York’s Times Square:
As of this writing, the law to which it will change will be the pre-EGTRRA/TRA law. In other words, we will have a $1 million applicable exclusion per person. Gone will be the days of the $5.12 million exclusion. Also, portability will be history. For many people, the New Year will not be very happy because of the tax changes it might bring.
It remains to be seen if Congress and President Obama can come to an early resolution on the issue before the expiration of the “Bush Tax Cuts” on January 1, 2013. It’s unclear whether the estate tax is even part of the negotiation on the “fiscal cliff.” Both sides have been very quiet in this regard.
If we go back to the old law, many things will change. Estate taxes will, once again, become more relevant to many people. However, there is one thing which I hope will not change. Clients and practitioners have refocused in the last few years, in ways I think are for the better. For the most part, their top priority has not been the tax issues. Their top priorities have been the legacy which the clients wish to leave, as well as asset protection, divorce protection, and Medicaid concerns.
I cannot help but think of the ending of the Great Gatsby: “So we beat on, boats against the current, borne back ceaselessly into the past.”
I hope that if we are borne back to prior law, clients and estate planning attorneys alike can retain the focus which they have learned. Taxes may become a more important part of the conversation after January 1st. However, I hope that we will make resolutions to remember the other priorities upon which we have come to focus in the last few years.
Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (800) 846-1555
- Planning Is Important - September 22, 2020
- Staying Current is Especially Important in the Pandemic - September 15, 2020
- Generational Wealth is Key to Leveling the Playing Field - September 8, 2020