The rest of this year promises to be very challenging for planners with wealthy clients. The federal exemptions on gift and estate taxes currently stand at $5.12 million, but they are scheduled to drop to $1 million in 2013 unless lawmakers act. In addition, President Obama's proposals for next year's budget would undermine many powerful wealth-transfer tax strategies. Planners need to be devising plans so that their clients can jump before an opportunity is lost.
There are a host of specific technical issues that are critical to address this year; in the past these may have been perceived by planners as more theoretical than real. In the simplest terms, in many client families, a couple should each establish and fund a trust today that is similar to the typical bypass trust (also called a credit shelter trust or an applicable exclusion trust) that is contained in their wills.
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