• SmartMoney

Beating the Next Tax Deadline

With only about three months left in the calendar year – and only three months remaining before major changes in tax laws are expected to kick in – you’re likely to hear a lot about year-end tax planning. An article in the current issue of Financial Planning magazine is a good reminder that it’s not too late to take advantage of some surprisingly generous rules.

The Tax Relief Act of 2010 contained some unprecedented benefits for taxpayers: In particular, the gift-tax exemption jumped from $1 million to $5 million. That means individuals can bequeath the latter amount without paying a penny in taxes. The catch: That change and others expire on Dec. 31. What’s more, the presidential and congressional elections – coupled with increasingly contentious debates in Washington about how best to reduce the federal deficit – are only adding to uncertainty about taxes in 2013 and beyond.

Martin Shenkman, a prominent tax attorney based in Paramus, N.J., highlights in Financial Planning some of the steps that procrastinators among us can take before year end. These include making or creating gifts to trusts, limited partnerships and living trusts.

Yes, estate planning can make your eyes glaze over. And many of the provisions in the 2010 tax act primarily benefit high-income families. But it’s certainly worth spending a few moments – if you haven’t already – with a tax attorney to determine if you can take advantage of Washington’s bighearted ways.

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