A couple of weeks ago we reported to you about rumors then circulating that the Congressional Joint Select Committee on Deficit Reduction ("Super Committee") might recommend reducing the estate and gift tax exemption to $1,000,000 as early as November 23, 2011. That did not occur and, in fact, the mandate of the Super Committee expired on November 23 with no deficit reduction proposals being agreed upon by the Super Committee.
As of this time, the $5,000,000 lifetime exemption from estate and gift taxes will remain in effect through December 31, 2012. For 2012, the exemption has been inflation adjusted to $5,120,000. On January 1, 2013, the exemption will revert to $1,000,000 and the maximum estate and gift tax rates will increase from 35% to 55%. Similarly, the current $5,000,000 exemption from generation-skipping transfer ("GST") tax is currently scheduled to remain in effect through December 31, 2012, and revert to $1,000,000 (adjusted for inflation since 2001) on January 1, 2013, with the GST tax rate being equal to the highest estate and gift tax rate.
Over the next couple of weeks you may read of proposals being introduced in Congress to accelerate the date of those changes and make other changes to the estate, gift, and GST taxes. At this time, there is no reliable information that would justify decision-making on the basis of rumor and speculation. We will closely monitor all such proposals and alert you promptly if any appears to be gaining traction. Most experts consider that highly unlikely given how heavily divided Congress is currently.
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