The Blatt Watch by Peter Blatt: How To Avoid A Massive Estate Tax Hike At The End of 2012

From the desk of Peter Blatt

July 12, 2012

The system isn’t broker, it just works for a select few. There just 181 days left for those in the know.

You need to act before the end of 2012 to take advantage of a IRS and Government approved exemption. A few days ago, I was sitting down with two clients – one who is a retired homicide detective and another who is a local business owner. The local business owner is retiring soon and he was telling us how he felt the “system” is broken.

I was about to answer with my own thoughts when the retired homicide detective stopped me with a wave of his hand. He said, “No, the system is not broken. It’s just designed to work for a select few.” He then stated, “The system is what the system is and it is our choice whether we will be one of the select few that the system works for.”

After finishing our meeting, I had written down a whole list of items that only the “select” few know. I decided that I want to share one of those with you today.

Today is the day to act. There is a clock ticking in the background. It is counting down the days left until the end of the year. Once the year is over, one of the best planning ideas will end. Make the decision to act. Ask yourself if you want to be one who receives the benefits of the system.

The 2010 Tax Relief Act will end at the end of 2012

In December of 2010, the “Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010” was created, and it’s scheduled to end in on December 31st, 2012.

This law created a two-year window allowing each individual a $5 million exemption on all transfer taxes, including gift and estate taxes, with a maximum tax rate of 35%.

At the end of 2012, the estate and gift tax exemption is designed to change dramatically.

The estate and gift tax exemptions are set to revert back to the 2001 levels of $1 million per person with a top tax rate of 55%. This means that if you add up all of your assets (including your house, your IRAs, retirement funds, stocks and bonds, gold, and cash) and it is over $1,000,000 in value, it will be subject to estate taxes when you pass away.

You have a small reprieve if you leave it to your spouse, but when he or she dies it will be subject to that 55%!

A carefully designed gifting strategy may help preserve and efficiently transfer more of your hard-earned wealth for future generations. How about reallocating enough of your assets to guarantee that your family can receive the rest of your assets estate tax free?

This reallocation can also provide an income tax-free benefit for your family. This plan of reallocation needs to be done with proper planning before the end of the year.

This is important. Please act promptly. Give me a call, Peter Blatt, at (561) 625-0900 to schedule a free consultation to review your estate assets and determine how planning today can help you avoid the massive estate tax increase that is coming in less than 6 months.

Until next time,