Wealth Transfer Tax Law

As we have indicated in previous communications, tax legislation enacted in December 2010 and in effect until the end of 2012 expanded wealth transfer opportunities for wealthy families by increasing estate, gift and generation-skipping transfer (“GST”) tax exemptions to $5 million. It also reduced the rate of each tax to 35%. However, comments from the administration and relevant portions of the federal 2012 budget reinforce the possible temporary nature of these provisions. President Obama pledged to push for the expiration of the current estate tax laws at the end of 2012. Further, the Obama budget included revenue items generated from limiting valuation discounts and requiring a minimum term for grantor retained annuity trusts (“GRATs”). Given the higher probability that the tax laws now in effect will not be extended and that other planning opportunities may be curtailed, it may be prudent to act promptly to take advantage of the favorable laws now in effect. As such, we strongly encourage clients to contact us to discuss what actions to take to capitalize on this expanded opportunity.

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