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Estate Planning in the Dark

Michael L. StarkIf you are currently without an estate plan, you are not alone. It is estimated you are one of the 120 million Americans who do not have a plan in place.

It is certainly understandable if you do not have a plan or if you are unsure about your current plan. This year is a time of great uncertainty for estate planning. We are facing a faltering up-and-down economy, a federal estate tax which changes radically at the end of 2012 and the elimination of the Ohio estate tax beginning January 1, 2013 with a caveat that it may return in part in the future.

How do you deal with such uncertainty when planning your estate? The best approach is to base your plan on the current facts while providing flexibility for the future. For example, consider making use of the current $5 million federal estate tax exclusion for each individual, or a total of $10 million for a married couple. This exclusion is portable so if it is not used with the first death, any excess can be used by a surviving spouse at the second death.

Certain requirements must be met to take advantage of the portability. The most important requirement is that a federal estate tax return has to be filed for the estate of the first spouse to die regardless of the size of his or her estate.

There are also changes in the federal gift tax. The current gift tax exclusion is $5 million, but that will change on January 1, 2013. If you are contemplating large gifts, the gifts should be completed before January 1, 2013. If you are contemplating large charitable gifts, you should consider making those gifts before 2013 as there may be changes ahead for income and estate charitable deductions.

Planning is confusing and difficult, however, this should not deter you from moving forward with your estate plan. If you have any questions regarding the recent changes to the estate and gift taxes, please contact Michael L. Stark or your Stark & Knoll attorney at 330-376-3300.

Stark & Knoll Co., L.P.A. 3475 Ridgewood Road Akron, Ohio 44333-3163
Phone: 330-376-3300 Fax: 330-376-6237

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