A Note From Paige
Happy New Year!
2013 is finally here! Thank you to each and every one who has helped me to achieve success in my firm. It's because of wonderful people like yourselves that I'm able to ring in 2013 with great enthusiasm and excitement for things to come. I hope that this New Year will be as good for you.
Congratulations on Surviving the Mayan Apocalypse and Avoiding the Fiscal Cliff
After much hemming and hawing, it seems we’ve once again averted the end of civilization as we know it. True, the Hostess Twinkie is no longer in production, but let’s try to focus on the positive – we managed to jump the fiscal cliff. Leading into the New Year there was quite a bit of discussion and debate as to how a failure to reach a deal on tax exemptions that were scheduled to expire could hurt the U.S. economy and the average taxpayer. So now that our political leaders have settled their differences and come to an agreement (of sorts), what will it all mean for you?
Estate Tax Exemptions: Congress has made permanent* the estate tax exemption which caps the amount an individual may transfer to another individual at a basic exclusion amount of $5 million, indexed to the rate of inflation (instead of dropping back down to $1 million).
Surviving Spouse Use of Estate Tax Exemption: Congress also made permanent* the ability of a surviving spouse to make use of any remaining exemption amount not used by the deceased. This amount will be tacked on top of any amount for which the surviving spouse was already exempt, for a total exemption amount of up to $10 million for the surviving spouse.
Estate Tax Rates: For estates valued over $5 million, the estate tax rates have been raised from 35 percent to 40 percent.
So if you don’t have an estate valued over $5 million, you don’t need to worry about these items or planning, right? Not so fast. Any massive changes like these will have an impact across the board. Just because these changes don’t seem to be immediately applicable to you doesn’t mean you should ignore your own planning. No matter the size of your estate, creating a plan is essential to guaranteeing that your assets, property and holdings are distributed or maintained in a way you see fit.
In addition to the estate tax changes listed above, there are several other changes that can have an impact on your taxes and planning. On the first $113,700 in wages, a taxpayer will now pay a 6.2 percent payroll tax, up from 4.2 percent. With regard to investment taxes, for taxpayers earning more than $400,000 for an individual or $450,000 for a couple, the capital gains and dividends tax rate will increase from 15 percent to 20 percent. To learn more about these and the other changes, I recommend checking out two very informative articles on CNN Money
If you’re still not sure if these changes will affect your estate, give me a call or send me an email
. Now that we’ve all survived this fiscal cliff and the Mayan-predicted end of the world, it’s time to get our affairs in order before the next apocalypse or Twinkie incident occurs!
*Although seemingly "permanent," absent a constitutional amendment, Congress could, of course, change course in the future.