A financial planner’s work is never done. The administration’s proposed 2014 budget takes aim squarely at the “permanent” estate tax reforms passed in January 2013. The current $5,250,000 estate tax exemption would plummet $1,750,000 to only $3,500,000. The estate tax rate would jump to 45% from the current 40%.
But that’s not all. The proposal would impose gift tax on gifts in excess of $1,000,000. Contrast that with today’s rules under which a taxpayer may gift as much as $5,250,000.
But even that’s not all. Restrictions were proposed that would curtail or eliminate powerful tools such as grantor-retained annuity trusts, intentionally defective grantor trusts, and dynasty trusts.
Now for the good news. These proposals are merely that. No laws have been enacted yet. We conclude with a planning tip. If your client is planning to transfer a financial legacy, the time to act may be now.
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