The New Age of Estate Planning

In passing the American Taxpayer Relief Tax Act of 2012, Congress has finally ended the uncertainty experienced by the wealthiest American taxpayers. During the 2012 holiday season before the deal was struck, estate-planning attorneys worked overtime to assist frenzied taxpayers in making the most of their $5.12 million tax exemption.

In the last three months of 2012, attorney Alan Gassman set up more trusts for his clients than he had done in the previous nine months. His clients were fueled by fears that the amount they could transfer tax-free to their children and grandchildren had nowhere to go but down.

After all was said and done, however, the $5.12 million tax exemption actually increased to $5.25 million for individuals to keep pace with inflation. In reacting to the new deal, Gassman stated, “You go from having more work than you ever dreamed you can do to wondering ‘is anyone going to love me this year.’” Gassman further noted that his clients are now wondering if they did the right thing in light of the new deal.

With the exemption amount remaining over $5 million, fewer people need to worry about estate tax when developing plans to transfer their assets to the next generation. Accordingly, estate-planning attorneys will need to look ahead to new growth areas in their field to keep their practice afloat in the new age of estate planning.