Estate Planning Tax Tips that May Be a Limited Time Offer

New York residents with significant assets or accumulated wealth may want to take advantage of current tax breaks when it comes to their financial affairs. With Congress ready to find ways and means to generate revenue into a flailing economy, the tax breaks to the wealthy including those pertaining to estate planning, may be the first on their chopping block. Many professionals in the field of taxes and estate planning are suggesting that these financial matters are better tended to sooner rather than later.

Under the Bush Administration, top tier income taxes went from almost 50 percent to 35 percent. Dividends as well received a special 15 percent tax rate. Rules on all matters of income taxation including those pertaining to gifting and estate planning changed as well. However this era of tax cuts may be ending in 2012 or 2013.

Many professionals say that tax rates are currently scheduled to revert to pre-Bush times by the end of 2012, with some even expiring at the end of this year. Thus, for the higher earners looking to avoid taxes in estate planning matters, this is the time to do so. A principal in a tax advisory firm in New York believes that acting today on these tax breaks is a wise move "given the mood in Congress these days".

Many have considered the exclusion of estate taxes to the wealthy as one of the most generous tax breaks from the Bush Administration. This tax break enables an individual to give $5 million over their lifetime or upon their death with no tax consequence and is currently scheduled to expire in 2012. The consensus is if you have large gifts to provide to your heirs, now is the time to do so.

The tax breaks in a dynasty trust are also expected to change. These are trusts that are also tax sheltered assets in perpetuity and allow families to keep their assets in the family for many generations. However the Obama Administration is seeking to move the estate tax exemption on these after 90 years, which will essentially limit their term.

Overall the Obama Administration is looking to refuel the economy in an election year. Tax breaks to the wealthy have never been a favored topic. Even so, the writing is on the wall for those that are high earners looking to take advantage of these tax breaks before it's too late.

Source: The Barron's, "Beat the Clock, Win Some Tax Breaks," Karen Hube, Dec. 3, 2011