Back in 2010 there was a lot of uncertainty within the estate planning community. During that year the estate tax was repealed because of a provision contained within the Bush era tax cuts.
But the tax relief act that provided this repeal was scheduled to sunset at the end of 2010. At that time the estate tax was going to return according to existing laws. The maximum rate of the tax was set at 55% and the exclusion amount was to be $1 million.
These figures represented a step backward from what we had in 2009 before this one year repeal. During that year the estate tax exclusion was $3.5 million and the top rate of the tax was 45%.
As it turned out, a new tax relief measure was passed in December of 2010 that altered the parameters for the better. It allowed for a $5 million exclusion and 35% maximum rate in 2011 and a $5.12 million exclusion in 2012 with the rate remaining the same.
We are highlighting this chronology because of the fact that a similar situation exists right now. The tax relief act that was passed in 2010 is going to expire at the end of this year. If it does so without any changes to relevant laws being passed, once again we are faced with the prospect of a $1 million exclusion and a 55% top rate.
But of course the possibility of last-minute legislation passing to save us from this fate once again exists.
The best way to be prepared regardless of how the winds blow is to have legal representation in place. The first step toward this end is to reach out and make an appointment to speak with a licensed, experienced South Carolina estate planning lawyer.