2012 Income/Estate/Gift Tax Update

Wondering about the state of the estate taxes and other tax brackets in 2012 (compared to 2013 if Congress does nothing this year to prevent this from happening)?  Take a look at the following chart:

U.S. Taxes 2012 v. 2013

2012 Top Tax Brackets

2013 Top Tax Brackets

Income Tax



Estate Tax



Capital Gains Tax






Generation Skipping Tax





2012 Exemptions

2013 Exemptions

Lifetime Estate Tax Exemption

$5.12 million

$1 million

Gift Tax Exemption

$5.12 million

$1 million

Generation Skipping Tax Exemption

$5.12 million

$1.3 million

What should be jumping out at you upon seeing this chart?

Firstly, barring action by Congress, many people need to be addressing their estate plans this year.  This is a golden opportunity for planned giving fundraisers to encourage inclusion in wills and other estate plans knowing that this is a year that people should be making changes.

Secondly, individuals potentially facing estate taxes should be considering significant gifting to heirs this year to take advantage of the $5.12 federal estate/gift tax exemption, as well as possibly using the generation skipping tax exemption this year.  For planned giving fundraisers, the 2012 gifting options might open opportunities for gifts like lead trusts.

There will definitely be changes to all of the numbers in the above chart either before the end of 2012 or sometime in 2013.  In the meantime, anyone concerned about estate taxes will still have to take action, just in case.

My advice to the planned giving world is to educate your donors and prospects on the estate planning flux were are currently facing, and keep pushing the bequest and other planned gift messages more than ever.  How often to people change their estate plans?  Usually  not often…except maybe for this year or next.

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