When developing an estate plan that is intended to provide ongoing income in your retirement years and succession planning, it is important to consider how tax consequences impact your estate plan. Many New Mexico Estate Planning Attorneys watched the debate between Congress and the White House over the \u201cfiscal cliff\u201d closely because of the potential tax impact. However, an equally important debate was being waged out of the public eye over the thresholds for exemption and tax rates for generation skipping taxes, gift taxes and estate taxes.<\/p>\n
Many Estate Planning Lawyers in New Mexico were concerned that Congress would not act to prevent the estate exemption from reverting back to the one million threshold. However, the American Taxpayer Relief Act of 2012 did not change the current $5 million exemption for gift taxes, generation skipping taxes and estate taxes. Because the exemption is adjusted based on inflation that actual threshold for 2013 is $5.2 million.<\/p>\n
The federal estate tax applies when assets are passed from those who die to their surviving beneficiaries when the size of the state exceeds $5.2 million. However, beneficiaries should seek legal advice because there are situations where estate tax may not apply, such as a transfer to a spouse after death.<\/p>\n
The American Taxpayer Relief Act of 2012 also made another estate planning tool permanent. The portability provision of estate tax law no longer offers only temporary relief. This portability provision permits any exemption that is not fully used by the first spouse in a marriage who passes away to be used to supplement the total amount of the surviving spouse\u2019s exemption.<\/p>\n
Another concern for higher income earners and New Mexico Estate Planning Law Firms was that the highest estate tax rate would rise back to 55 percent from the top tier of 35 percent that was in effect in 2012. While the top rate on estate tax did increase, it only rose to forty percent.<\/p>\n
Some people are unfamiliar with the generation skipping tax so we have provided a brief explanation. The federal government enacted the federal generation skipping tax to prevent parties from avoiding paying tax when making a multi-generational gifts. These types of transfers can happen in both a direct and indirect form of transfer. A direct gift would be a gift of a residence to a grandchild from a grandparent whereas as in indirect gift would involve transferring the house to a grandchild but granting a life estate to the grantor\u2019s daughter.<\/p>\n
The above information is designed solely to illustrate general principles of law, and does not constitute a specific legal opinion on individual cases. We suggest that you contact experienced legal counsel for a specific opinion tailored to your individual circumstances.<\/p>\n
While this blog post provides some basic tax information that is relevant estate planning, the best way to learn more specifics about tax issues specific to your situation is to contact the experienced New Mexico Estate Planning Attorneys at Jay Goodman & Associates. Call us today to schedule your free consultation at (505) 989-8117 to learn about your options.<\/p>\n","protected":false},"excerpt":{"rendered":"
When developing an estate plan that is intended to provide ongoing income in your retirement years and succession planning, it is important to consider how tax consequences impact your estate plan. Many New Mexico Estate Planning Attorneys watched the debate between Congress and the White House over the \u201cfiscal cliff\u201d closely because of the potential […]<\/p>\n","protected":false},"author":10,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[1,7],"tags":[],"class_list":["post-562","post","type-post","status-publish","format-standard","hentry","category-blog","category-estate-planning-and-probate"],"aioseo_notices":[],"yoast_head":"\n