January 2013 ALB Office Closings
Monday, January 21 - Martin Luther King's Birthday
A Message From
Mark Milbrod, CLU
Mayans, Elections and Cliffs,
Oh My!
Here we are. The Mayans had it wrong. We live to fight another year. I do look forward to the tabloid headlines of 2013 telling us how the world will end this year. Got to give them credit, they sure know how to make lemonade out of lemons.
2012 was certainly a challenging year. There was so much uncertainty with an election in the balance, a Fiscal Cliff and the unknown tax climate. But we have a re-elected President, averted going over that cliff and now we have a better idea as to the estate tax.
So, what does it all mean? As financial professionals, these things bring us opportunity. Here's a brief synopsis of "The American Taxpayer Relief Act of 2012" that was signed into law by President Obama on January 3, 2013:
Forty Percent Top Tax Rate
There is a 40 percent top tax rate which is up from the 35 percent rate that existed through 2012. It was a middle of the road compromised rate that was deeply debated.
Unified Exemption
The exemption remains at $5 million and is indexed for inflation since 2011, which places it at $5.25 million for gifts made by individuals during life and for the estates of decedents dying in 2013. In addition to the lifetime exemption, individuals can also gift $14,000 per person in 2013, known as the annual gift tax exclusion, and which does not impact the lifetime gifting exemption.
Portability
The December 2010 legislation introduced the "portability" of the exemption for gift and estate tax purposes, whereby the exemption not used by the first spouse to die would be available for use by the surviving spouse for gift tax purposes and the surviving spouse's executor for estate tax purposes. This, however is not usable for GST tax purposes.
Other Noteworthy Highlights
- For most individuals, the law permanently extends the lower federal income tax rates that have existed for the last decade. That means most clients will continue to pay tax according to the same six tax brackets (10%, 15%, 25%, 28%, 33%, and 35%) that applied for 2012.
- Reinstatement of the 39.6 percent individual income tax rate and 20 percent capital gains tax rate for taxable income over $450,000 for joint filers and $400,000 for single individuals;
- Return of the phase-out of personal exemptions and itemized deductions, but with higher thresholds for itemized deductions;
- Restoration of the IRA charitable rollover for 2012 and 2013 for individuals over 70�, with special rules for IRA distributions made in December 2012 and for charitable rollovers made in January 2013; and
- Indexing the individual alternative minimum tax (AMT) exemption for inflation, in effect making the annual AMT "patch" permanent.
By far the guidance given with the exemption limits is the most helpful to all of us as advisors. Simply, we have more time to assist our client's planning needs without a timer over our heads. Also, the annual gift tax exclusion has been defined for 2013 so we have a handle on that as well.
In addition, the lower federal tax rates have been put in place so that tax rates will remain lower for 97% of Americans and 98% of Business Owners. That should make our clients more apt to move ahead with other planning.
Like anything else, who knows if and when Congress will change their minds and modify these changes again? But, this still represents a tremendous opportunity today as it seems we will be OK for the foreseeable future.
With all of this, many doors are open to a multitude of sales. Don't forget to inquire about our Four Core Practice Elements Training that will help you start off 2013 on the right track and head yourself towards one of your best sales years ever.
2012 is over -- Mayans, Elections and Cliffs, Oh My! We got through it and now its time to get to work.
HAPPY SELLING!
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