Issue link: https://viewer.e-digitaledition.com/i/51232
++++++++++++++++++++++ +++ +++ ++++++++++++++++++++++ TAXING ISSUES + + Estate and Gift Tax Rules for 2012 and Beyond? By Michael T. Livesay, CPA/PFS IN THE OLD DAYS, Federal estate and gift tax planning was both harder and easier. It was harder because the exemption amounts were much smaller and the tax rates were higher, therefore the taxes paid were usually higher. It was easier because the rules were more static and therefore easier to plan for. Today it requires a constant updating of facts and guessing what the future will bring, but that comes with benefits, at least for a short time. For 2012 (as well as 2011), the Federal rules are very liberal and provide for a $5,000,000 exemption for each spouse. It is portable and can be used by either spouse through transfers by gift and/ or death. There is also a $5,000,000 generation skipping transfer (GST) exemption available to each spouse. These are used in conjunction with your estate/gift tax exemption when you skip your children and leave assets directly to your grandchildren or future generations through the use of dynasty trusts, etc. In the event that all these exemptions are not enough to shelter your assets, the tax rate in effect for any taxable transfers (the amount in excess of the exemption) is essentially 35%. Beyond 2012, no one knows what the rules will really be. If nothing happens in congress, they will revert back to the rules in effect in 2001. That means we lose portability, the gift and death exemptions go to $1,400,000 for each spouse and the GST exemption goes to $1,000,000. The tax rate essentially goes back to 55% for any taxable transfers. What should you do while we are in this state of flux? First, review your current wills and trusts to ensure they were updated in the last few years. Second, review them with your advisor to ensure they will achieve your goals and allow flexibility for changes in the law. Third, if your assets are in excess of what you need, and you are willing to consider making some transfers now, you should speak with your advisor about whether doing so before the end of 2012 makes sense, before the $5,000,000 exemption goes away. For Ohio residents there is currently great news after 2012. Beginning January 1, 2013, the Ohio estate tax (currently about 7% of transfers in excess of $338,333) will cease to exist. Michael Livesay is a principal of Weidrick, Livesay, Mitchell & Burge, LLP in Akron. He is a personal Financial Specialist (PFS), as well as a CPA. ■ Brouse McDowell adds value to your health care business. The health care industry constantly faces new and complex challenges. Brouse McDowell takes challenges and turns them into opportunities for growth and prosperity for your business. To do this requires a comprehensive knowledge of the law, as well as a clear understanding of the business of health care, a rare and valuable combination. Brouse McDowell's health care practice group includes experienced specialists that proactively counsel and advise AKRON | CLEVELAND | AVON AKRON OFFICE: 388 S. Main St., Ste. 500 Akron, Ohio 44311 330.535.5711 | brouse.com It's our business to understand your business... JANUARY-FEBRUARY 2012 MDNEWS.COM MD NEWS Cleveland-Akron-Canton | 39 a wide array of health care clients, including multi- and single- physician groups, hospitals, health systems, ancillary service providers, long term care facilities, medical device companies and durable medical equipment and supply companies. For more information, please contact: Daniel K. Glessner, Practice Chair, 330.535.5711 Ext. 316 or dglessner@brouse.com or Christopher M. Huryn, 330.535.5711 Ext. 389 or churyn@brouse.com. ©2011 Brouse