We await details, but the last minute deal includes a provision to continue the $5.12 million estate tax exemption-and (subject to confirmation) the $5.12 million lifetime gift tax exemption as well! Whether such amounts remain indexed to inflation is not yet clear. The status of the Generation Skipping Transfer Tax Exemption is not yet known. Like other legislative changes before it, modifications of the new law, if passed, will be anticipated via technical corrections and IRS rulings.
Based on a quick assessment of our clients who engaged in planning and gifting to beat the fiscal cliff, we believe that:
1) year end gifts remain valuable to remove future appreciation in the value of gifted property from the estate tax;
2) until other technical provisions of the new law are determined and announced, it will be difficult to assess the effect of the new law on existing estate plans
3) the likely permanence of the large exemptions will ease the anxieties of most clients.
When more information is known, we will post it here. Happy New Year!