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How Obama's budget could affect estate tax plans

Many Texas residents are aware that President Obama has proposed a number of changes within his 2014 budget. However, there are many who are unsure exactly how those changes could affect estate tax matters and the overall estate planning process. Each individual or family's situation is unique, but there are a number of important considerations that all Americans should note.

One matter involves the proposed climb in the estate tax from the current 40 percent to 45 percent. This hike would only apply to the wealthiest taxpayers, and would go into effect in 2018. In addition, the gift tax exemption would drop from $5.2 million to just $1 million. These are all important factors for those who are considering their estate planning needs. It would simply become far more difficult to transfer gifts to family members without the use of complex estate planning tools.

Spouses would still be able to use any unused estate or gift tax exemptions of their deceased partner without tax consequences. Many see this as a positive aspect of the plan. However, this can also be viewed as a limited benefit, and not an effective way to minimize overall tax liabilities.

For individuals who are considering the best way to structure their estate tax planning, it is important that Texas residents understand that there are solutions that can help minimize the financial impact of the proposed 2014 budget changes. While some of these tactics are complex, it is well worth the time and effort required to ensure that the assets compiled in one's estate are passed down in the manner intended. Looking ahead to the possibility of future changes is one step in the right direction.

Source: fa-mag.com, "Weighing The Obama Budget's Impact On Estate Planning," Jonathan M. Forster and Jennifer M. Smith, May 10, 2013

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