Unless you live under a rock or purposely don’t read, watch, or listen to the news, you’ve heard the term “fiscal cliff.”  The term that was coined to refer to the hundreds of tax cuts that will expire at the end of 2012.  I like to explain it as the tax version of the story of Cinderella – and January 1, 2012 at 12:00am, the carriage turns back into a pumpkin.

Yet, most of the articles you’ll read and news you will hear is focused on income tax items.  What about that seemingly forgotten tax – the estate tax?  Well, Forbes.com has a great article about what the current law says (warning – it’s not pretty!) and their prognostication on what will happen with the estate tax in the near future.  Click here to read the article.

Of course, I can’t just reference an article about such a hugely important topic to families and business owners without sharing my two cents.  Overall, I agree with much of what Ms. Jacobs says in the article.  But, there are a few items I think she glosses over quickly that need to be given more emphasis.  They are:

  • She continually emphasis “rich,” and “wealthy” to refer to those who would be affected and seems to do so in a patronizing tone.  I have a few issues with that.  First, “rich” and “wealthy” are relative terms and they should also take into consideration more than just what money or assets you have (see what I mean by clicking here to read about Whole Family Wealth).  Second, your “estate” for estate tax purposes is likely much bigger than you know (do you have life insurance?  It’s included!).  Click here to read about what’s included in your estate tax estate.  Finally, many business owners will be included in who she considers “rich” or “wealthy” as a result of their business profits “flowing through” to them on their income tax return – whether or not they actually get the profits (if you have questions on what I mean by that, contact me).
  • She mentions her belief that “portability” will continue – the ability for a surviving spouse to use their deceased spouse’s unused estate tax exemption.  BUT, she (and most of the folks I see writing about portability) fails to mention that to claim that unused exemption amount you must make an election on a timely filed estate tax return.  If you don’t, you lose it.  Yet, many folks won’t think to do so and will lose the unused exemption forever. Having a comprehensive estate plan in place can guarantee you get the maximum exemption – that’s just one reason why planning is SO important.
And if this comes as a surprise to you, you should read my blog more 🙂  I wrote about it 2 years ago – you can read the post by clicking here.
The most important thing you can do is invest your time and some of your money in meeting with a dedicated estate planning attorney to create a caring, comprehensive estate plan for your family.  One that has flexibility built into it so that it covers changes that Congress so much likes to make in this area of law.  Call us today at 616-827-7596 to get started!
Michael Lichterman is an estate planning and charitable planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for “stuff” – it’s about who your are and what’s important to you.  He focuses on estate, charitable, and asset protection planning for all generations (“young” and “experienced”), the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned businesses, and pet planning.  He enjoys creating life long relationships with his clients centered on their family’s values, insights, stories and experiences.