• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
Unsworth LaPlante is open for in-person meetings! We have taken precautions in our office to ensure the safety and well-being of our clients and staff. To learn more about how Unsworth LaPlante is helping people through the COVID-19 pandemic, click here.

Unsworth LaPlante, PLLC

Vermont Estate Planning Attorneys

Vermont: (802) 879-7133

Attend A Free Webinar
  • Home
  • Our Firm
    • About Our Firm
    • Meet Our Team
  • Services
    • Elder Law
    • Estate And Gift Tax Figures
    • Estate Planning
    • Incapacity Planning
    • IRA & Retirement Planning
    • Legacy Planning
    • LGBTQ Estate Planning
    • Pet Planning
    • SECURE Act
    • Special Needs Planning
  • Resources
    • Articles
    • Elder Law Reports
    • Elder Law Resources
      • Burlington
      • Free Estate Planning Seminars
      • Montpelier
      • Rutland
      • St. Johnsbury
      • White River Junction
    • Free Estate Planning Worksheet
    • Frequently Asked Questions
      • Estate and Gift Tax
      • Estate Planning
      • FAQs for Families Without an Estate Plan
      • Incapacity Planning
      • IRA & Retirement Planning
      • Legacy Wealth Planning
      • LGBTQ Estate Planning
      • Medicaid
      • Pet Planning
      • Special Needs Planning
      • Trust Administration
      • Trusts
      • Wills
    • Is Your Estate Plan Outdated?
    • Medicaid Resources
      • Medicaid Analysis Worksheet
      • Medicaid Guide
      • Vermont Medicaid
    • Newsletters
    • Presentations
    • Reports
      • Advanced Estate Planning
      • Basic Estate Planning
      • Estate Planning for Niches
    • Top Estate Planning Techniques
  • Webinars
  • Communities We Serve
    • Burlington
  • Reviews
    • Our Reviews
    • Review Us
  • BLOG
  • Contact
Home » ATRA and Your Estate Planning Efforts

ATRA and Your Estate Planning Efforts

October 19, 2013 by Stephen Unsworth

As you may know, when the American Taxpayer Relief Act of 2012 was passed and put into law, it immediately made permanent several estate and gift tax provisions. It also provided a more definitive rule for transfer tax rates and exemption amounts. These were put in place in a way that would allow them to kick in this year.

ATRA

For more than a decade, there was no small degree of confusion about a number of compliance issues for transfer tax rates and exemptions.

The new law remedies most – though not all- of these problematic issues.

Among them:

  • It makes specific transfer tax and income provisions in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA).
  • It also acknowledges and makes permanent income tax provisions in the Jobs and Growth Tax Relief Reconciliation Act of 2003.
  • Puts into place certain transfer tax provisions as part of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, or as it’s known -2010 Tax Act.

As far as gift taxes go, the new law shifted and basically “reset” the tax rate schedule to better coincide with estate tax rate schedules with a maximum rate of 40 percent. Before the law was enacted, the exemption amounts for both the gift and the estate tax was the same.

After EGTRRA, we saw the estate tax exemption amount consistently rise even as the gift tax exemption amount remained at $1 million. As a temporary fix, the 2010 Tax Act remedied the differences in the tax exemption amounts. Now, though, ATRA ensures it’s a permanent fix, along with the now-permanent $5 million gift tax exemption. Note, too, it’s indexed annually for inflation and is $5.25 million for 2013.

Estate Tax

Remember, ATRA sets the top estate tax rate at 40% with lower rates that are applicable for those estates less than $1 million; however, it’s important to note that the lower rates present a bit of a domino effect in that the lower rates will kick in a different calculation method that takes into account only the estate tax only for an estate in excess of the estate tax exemption amount. It also allows a surviving spouse to take advantage of any unused tax exemptions by making them permanent.

Generation-Skipping Transfer (GST) Tax

Finally, we take a look at the generation skipping transfer tax. It applies the highest tax rate – which is 40 percent. The exemption amount mirrors the estate tax exemption amount, which as we know, is $5.25 million for 2013. What the law does do is repeal the so-called sunset provisions in EGTRAA by making some of those tax provisions permanent. A few of those include an automatic allocation of GST exemption for indirect skips and trust severances for GST tax purposes.

It’s understandable that despite the changes in the laws, it can all become a bit overwhelming. That’s just one reason why finding a qualified estate planning lawyer can ensure your bases are covered with no vulnerabilities. He can also keep a close eye on any changes in the law that could better benefit you and your family in the long run.

Remember, the IRS continues to target family limited partnerships, or FLPs so those dynamics could shift in the near future as well. Don’t risk missing out on any opportunities to benefit from the changes when it’s possible and certainly you don’t want to move forward believing you’re in compliance, only later learning you’ve been hit with penalties.

  • Author
  • Recent Posts
Stephen Unsworth
Stephen Unsworth
Stephen A. Unsworth is admitted to practice in both Vermont and Maine, and has more than 30 years of experience in estate planning and business law. His mission is to provide quality estate planning services, including assistance with Living Trusts, Wills, Medicaid Planning, Probate, Trust Administration, Powers of Attorney, Special Needs Planning, and Family Limited Partnerships.
Stephen Unsworth
Latest posts by Stephen Unsworth (see all)
  • Genworth Releases 2020 Cost of Long-Term Care Survey - January 18, 2021
  • Will Social Security Go Up in 2021? - December 7, 2020
  • What Is a Step-Up in Basis - November 23, 2020

Filed Under: Estate Planning Tagged With: Estate Planning, life insurance, asset protection, financial planning, estate planning lawyer, flp, atra, transfer tax, income tax provisions, job creation act of 2010, egtrra, top estate tax rate

Other Articles You May Find Useful

Leaving Assets Can Be Tricky – Part 3
intestacy Hsieh
Tony Hsieh of Zappos Fame Died Without a Will
What the 2020 Election Could Mean for Your Estate Plan
New Year estate planning resolution
New Year’s Resolution: End the Estate Planning Procrastination
estate tax 33
IRS Releases 2021 Estate Tax Exclusion Adjustment
Preparing for the Unexpected…and the Eventual

Primary Sidebar

Elder Law and Medicaid Planning Attorneys

Unsworth LaPlante, PLC

DOWNLOAD OUR FREE ESTATE PLANNING WORKSHEET

There's a lot that goes into setting up a comprehensive estate plan, but with our FREE worksheet, you'll be one step closer to getting yourself and your family on the path to a secure and happy future.
  • This field is for validation purposes and should be left unchanged.

Follow Us

  • Facebook
  • LinkedIn
  • Twitter
  • YouTube

Blog Subscription

  • This field is for validation purposes and should be left unchanged.

Essex Junction, VT

26 Railroad Ave
Essex Junction, VT 05452
United States (US)
Phone: (802) 879-7133
Fax: (802) 879-0408

Map

unsworth_sidbr_map

Office Hours

Monday8:00 AM - 5:00 PM
Tuesday8:00 AM - 5:00 PM
Wednesday8:00 AM - 5:00 PM
Thursday8:00 AM - 5:00 PM

Footer

footer-logo
  • Facebook
  • LinkedIn
  • Twitter
  • YouTube

The information on this Vermont Attorneys & Lawyers / Law Firm website is for general information purposes only. Nothing on this or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. This information on this website is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship.

American Academy of Estate Planning Attorneys, Inc. Privacy Policy | Contact Us | Disclaimer | Site Map | Powered by American Academy of Estate Planning Attorneys

© 2021 American Academy of Estate Planning Attorneys, Inc.