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Why Do Estate Exemptions Exist?

One of the major breakthroughs in the new tax law surrounds the estate and gift tax system. For the first time in over a decade, we have some clarity over what is going to happen with estate tax rates, exemptions and the “portability” of those exemptions, as we outlined here previously.

One of the hot topics of the fiscal cliff debate was the estate exemption level. This amount was scheduled to be reduced to $1 million in 2013, but the new law kept the existing exemption of $5 million on the books permanently moving forward. While these changes directly affect a very small part of the population, the impact will ultimately be far more widespread.

In this article, we will explore why exemptions exist in the first place, and our next post will discuss why the planning implications will filter down to a much larger number of taxpayers than it may appear on the surface. (more…)


Avoiding the Fiscal Cliff – Tax Update

Continuing past trends, Congress and the House took us all to the very edge of the Fiscal Cliff, but finally passed legislation to avoid the majority of the damage that would have been caused by going over.

The final bill is very similar to the summary we provided just before the holidays. For most of you, the changes will be modest compared with recent years, but tremendous relative to what would have occurred if nothing was done. There are some significant tax increases for high-income earners, but they, too, pale in comparison to what would have occurred if we took the plunge.

The areas that will most significantly impact you as individual taxpayers are as follows: (more…)

Taking Over an Aging Parent’s Finances

As is the case with most difficult situations involving people we love, the planning element of taking over an older relative’s finances is best done in happier times, when both sides are healthy and in a sound state of mind. And like all forms of financial planning, any planning is better than no planning at all.

No one really wants to have these conversations – particularly during happy times – because they project images of a lifestyle or situation that we all hope to avoid. However, the short-term pain of having these conversations well in advance alleviates a great deal of pain, suffering, guessing and arguing if a life-changing event intervenes first. (more…)