Private Client Group transfers more than $1.2 billion in assets

As the “fiscal cliff” crisis grew to a crescendo in 2012, the Thompson Coburn Private Client Group advised and assisted clients with the transfer of more than $1.2 billion in assets, with the intent to take advantage of expiring 2012 tax laws and minimize the estate, gift and income tax consequences of the impending 2013 tax laws.

Under the laws in place in 2012, an individual could transfer up to $5.12 million free of estate and gift tax.  Any amounts subject to gift tax would be taxed at a maximum rate of 35%.  However, the 2012 exemption and rates were set to expire on December 31, 2012, scheduled to be replaced with an estate and gift tax exemption of $1 million with a maximum tax rate of 55%.

During what many estate planning practitioners described as the largest transfer of wealth in the past ten years, the Private Client group transferred more than $1.2 billion of assets, including cash, marketable securities, interests in privately-owned businesses, farms, ranches, and private homes, in an effort to minimize the harsh effect of the anticipated 2013 tax laws.  To accomplish these transfers, attorneys in the group employed sophisticated planning techniques to leverage discounted asset values, minimize estate, gift and income taxes, optimize creditor protection, enhance charitable giving, and secure business succession planning.

On January 2, 2013, President Obama signed the American Taxpayer Relief Act of 2012 (the “Act”).  The Act included numerous income, estate and gift tax provisions, including creating a permanent estate and gift tax scheme for the first time in more than a decade.

Estate and gift tax highlights from the Act include:

• Estate tax exemption set at $5 million on a permanent basis.  This amount is indexed for inflation from 2011.  For 2013, an individual’s estate tax exemption is $5.25 million.
  
  
• Gift tax exemption set at $5 million on a permanent basis, also indexed for inflation.  For 2013, an individual’s estate tax exemption is $5.25 million.  Thus, in 2013, a married couple could make lifetime gifts of $10.5 million without incurring a federal gift tax.
  
  
• Spousal “portability” election made permanent. This election allows a surviving spouse to use the unused estate tax exemption of the deceased spouse to shield lifetime gifts or assets transferred at death from gift and estate taxes. 

Here is a summary of the American Taxpayer Relief Act of 2013 from the Thompson Coburn Private Client Group.