Whether your client’s estate is large, small, or somewhere in between, a new law that took effect this year might warrant a closer look.
The American Taxpayer Relief Act holds important provisions for investors with estate assets.
The law made permanent the 2012 federal estate tax and gift tax exemption levels and included an adjustment for inflation, providing clarity on tax rates that have been fluctuating for several years. The law also established a permanent portability provision, allowing a surviving spouses to reduce their own taxable estate by factoring in any unused portion of the deceased spouse’s estate tax exemption (up to the maximum individual limit).
The new rules create an opportunity for financial advisors to meet with clients and prospects. Putnam’s investor education paper, “A closer look at the new estate and gifting tax rules,” can help launch a discussion.
Financial advisors should also consider segmenting clients into two groups — those whose estate places them at a level under the estate/gift tax exemption, and those with an estate that exceeds the exemption levels. Each group has a different roadmap of discussion points and planning ideas.
Here are some discussion points for clients and prospects:
Clients with existing estate plans may also want to consult with a tax professional to review the new guidelines and determine how the changes affect their individual planning situation.