Gift exemptions, portability and trusts: Year-end estate planning considerations

Year-end is always the time for gifting, charitable giving and estate plan tune-ups, but uncertainty in Washington is leading to serious head-scratching in West Michigan.  Mark Periard, a partner at Warner Norcross & Judd LLP and chair of the firm's Trusts & Estates Law Group, says that attorneys are trying to respond to more-than-typical requests for year-end counsel because of substantial changes that are scheduled to occur to the estate tax laws.

“There's a lot going on right now, and it's tough for any of us to make predictions on what's going to happen in Congress,” Periard explains.  “Right now, the law allows for a $5.12 million lifetime gift and estate exemption – or $10.24 million in the case of a couple – but that's set to roll back to $1 million and $2 million if nothing is done by the end of the year.  Of course, with the whole fiscal cliff situation, Congress might choose to extend everything for a year.  If Congress can't reach an agreement, they might wait until January or February and then pass legislation that is retroactive.

“While we don't know what will happen in the future, the estate planning options are favorable right now.  There are several issues that clients need to be aware of as they continue to make estate-planning decisions while we are in the midst of so much uncertainty.”

Periard highlights several issues that firm clients need to pay attention to: use of the exemption for gifts prior to Jan. 1, portability (ability of spouses to share exemptions that has not been extended for 2013 yet), establishing trusts that also include the spouse as beneficiary in addition to children so that if the parents need access to these large gifts, the spouse could have access providing an "emergency security" blanket of sorts.