With the passing of American Taxpayer Relief Act of 2012 (ATRA), P.L. 112-240 clients now have broader power to save on federal estate taxes.
Significant expansion of the federal estate tax exclusion has dramatically changed how estate planning professionals plan for married couples. In 2000 when the federal estate tax exclusion was merely $675,000 and federal tax rates peaked at 55%, bypass trusts or “credit shelter trusts” were a popular means of sheltering wealth to preserve assets for a surviving spouse and children. Today however, the exclusion amount has grown to an astounding $5.49 million per spouse, which is now “portable” and can be carried over to the surviving spouse’s estate. Thus, significant changes in recent years have compelled estate planning attorneys to consider the concept of portability versus bypass trusts.
Continuing reading in the Cleveland Metropolitan Bar Journal.