Key Issues from the 47th Annual Heckerling Institute Conference on Estate PlanningMarch 6, 2013

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During the week of January 14, 2013, I was fortunate to attend the Annual Heckerling Institute Conference on Estate Planning in Orlando, Florida.  It is the nation’s leading conference for estate planners, including accountants, attorneys, trust officers, insurance advisors and wealth management professionals.  The sessions offered a comprehensive coverage of the latest estate planning techniques and strategies.  In addition to estate planning topics, I also attended programs on important related areas of elder law, marital law and income tax planning.   Special program tracks allowed me to customize my educational experience.  Of course, I chose the focus series which concentrated on intra-family wealth transfers, which are often the heart of the estate planning process.


Since this is primarily an estate planning conference, I would be remiss if I did not mention some of the highlights of estate tax changes which became effective on January 1, 2013.  This conference came on the heels of the recent passing of ATRA (American Taxpayer Relief Act of 2012) by Congress in an effort to avoid the fiscal cliff.  ATRA created some permanency for the estate tax area as follows:

  •  It set the applicable base exclusion amount (the amount an individual can give away free from transfer taxes) at $5 million indexed for inflation beginning in 2012.  As a result, the applicable exclusion amount for 2013 is $5.25 million.  This amount has been permanently unified for the gift, estate and GST areas.
  • The annual gift exclusion amount remains indexed for inflation.  For 2013, it has been increased to $14,000, from $13,000 in 2012.
  • The maximum transfer tax rate has been increased to 40 percent from the 2012 rate of 35 percent.  Even though this is an increase from the 2012 rates, it is better than the 55 percent rate that would have applied if Congress did not act.
  • “Portability” has been made permanent.  This means that a deceased spouse’s unused applicable exclusion amount is permanently portable to the surviving spouse.  It is conditioned on the timely filing of the appropriate estate tax return for the deceased spouse even though his or her taxable estate is less than $5.25 million.  This concept could potentially eliminate the need for certain kinds of trust planning.
  • Now that the base exclusion is currently at $5.25 million, those who did not quite implement their gifting strategies at the end of 2012, in anticipation of reduced exemptions and increased rates, now have additional opportunities to complete their efforts.  If gifting was maximized at the end of 2012, there is still an opportunity to take advantage of the 2013 inflation indexing, and an additional $125,000 can be gifted in 2013.  Although the $5 million exemption has been made permanent and the rates have gone up, it is still important to plan for both tax and non-tax reasons.


New Jersey residents must not forget the exemption amount of $675,000 is far lower than the federal exemption amount of the current $5.25 million.  Also, the state of New Jersey does not recognize portability, so we are dealing with substantially different rules.  While I previously indicated that certain planning with trusts might potentially be eliminated with the concept of portability, New Jersey residents should think twice.  There are certain planning techniques that can be utilized to minimize New Jersey estate taxes while also taking advantage of the new federal estate tax laws.  I highly recommend you consult your team of advisors to devise the best strategy for you.


For more information about recent estate tax changes, including ATRA, please contact me at or 732.747.0500.

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