Estate planning lawyers worked themselves ragged to close out 2012 in preparation for the approaching fiscal cliff. Lawyers worked overtime during the holiday season to set up trusts and fund them with gifts that made maximum use of what was then the $5.12 million per person tax-free amount.
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But in less than three pages in the 157-page law, Congress passed the American Taxpayer Relief Act of 2012 or ATRA, and put to rest the looming uncertainty that had haunted wealthy taxpayers for the past 12 years. As it came to pass, ATRA did not adjust the amount you can pass tax-free during life or at death. On Jan. 11 the IRS announced that with the inflation adjustment, that amount will be $5.25 million in 2013 ($10.50 million for married couples).
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With fewer people worrying about estate tax, lawyers are uncertain what their next career move will be. Clients are calling to ask if they did the right thing, expressing concern about whether they will have enough for themselves down the road and whether they gave too much away. Other residual work for lawyers in 2013 will include preparing gift tax returns for 2012 gifts, which are due on April 15.
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Gift tax audits will begin in 2014, while the IRS challenges some of the cute text tricks used to leverage or pack even more into the lifetime exemption amount. But looking ahead, there is less work to be done. Some firms plan to engage in strategic planning, while others look for growth in the field of elder law, dealing with asset transfer and the quality of life as people age.
Mr. Witzke practices in the areas of estate and gift tax planning, financial planning, retirement planning, LGBT civil rights, charitable giving, elder law, and small business planning. He focuses on helping clients grow, protect, and transfer wealth efficiently. Mr. Witzke is a past president and board member of the Financial Planning Association of Michigan, a member of the board of directors for Leadership Oakland, and a member of the planned giving advisory committees of Wayne State University and the Community House in Birmingham. Follow Mr. Witzke on Twitter @gr8estatelawyer.
