3. 3
King Copler's practice focuses on tax planning for businesses
and individuals, as well as planning for mergers and
acquisitions. Before joining the firm, King was the partner in
charge of the Chattanooga tax practice of Ernst &Young.
Licensed to practice inTennessee
Estate PlanningCounsel of Chattanooga, past President
American Institute of Certified Public Accountants (retired)
Tennessee Society of Certified Public Accounts (retired)
King received his BS, magna cum laude, from MiddleTennessee
State University, and his law degree from University of
Tennessee College of Law.
King Copler
4. 4
Dana Perry focuses her practice on estate planning,
elder law and special needs trust planning.
Certified as an Elder Law Specialist (CELA) by theTennessee
Commission on Continuing Legal Education and Specialization
Licensed to practice inTennessee and Georgia
Accredited Attorney, Department ofVeterans Affairs
Listed in The Best Lawyers in America for elder law and trusts
and estates
Martindale-HubbellAV® Peer Review Rated
Dana received her BA from the University of the South
(Sewanee), and her law degree fromVanderbilt
University.
Dana Perry
5. For Our Question and Answer Sessions
Type your questions into the “Questions” panel
on the webinar tool.
Once the Webinar is Over
• You will receive a copy of this presentation
• You will receive a recording of this webinar
• Any questions that are not answered during the webinar
will be addressed in a follow-up email
6. Agenda
• Part 1: IncomeTax and HealthcareTax
• Part 2: Changes to IncomeTax Deductions
• Part 3: Proposals to Limit Itemized Deductions
• Part 4: Tax Increases on Estates andTrusts
• Question and Answer
• Part 5: Charitable Giving From IRAs
• Part 6: Changes to Estate, Gift and GSTTaxes
• Part 7: FinalThoughts
• Final Q & A
• Wrap-Up
6
10. Changes to the
IncomeTax Rates
Individual Rates
Top rate goes to 39.6% for single taxpayers
over $400,000 and $450,000 for married
couples.
10
11. Changes to the
IncomeTax Rates
Capital Gains Rate
Maximum capital gains rate goes to 20%
from 15% in 2012.
11
12. Changes to the
IncomeTax Rates
HealthcareTax
3.8% tax added for those with modified
adjusted gross income over $200,000
($250,000 for joint returns). Applies to
investment income.
12
13. Alternative MinimumTax
(AMT) Relief
13
• Permanent Relief from the individual
(AMT). Exemption amounts increased
to $50,600 for unmarried filers and
$78,750 for married filers.
• Amounts will be adjusted for inflation.
15. Phase-out
• Personal Exemption and Itemized
Deduction Phase-out. Deductions phase-
out 3% for incomes over $250,000 for
singles. ($300,000 for married couples.)
15
18. Proposals
• PresidentObama has called for a cap of
benefit of itemized deductions to 28%.
• Simpson-Bowles -- one option would
eliminate all itemized deductions and lower
rates.
18
20. More Proposals to
Limit Deductions
• Wyden-Coats would eliminate most
itemized deductions but would retain
mortgage interest and charitable
contribution deductions.
• Expect States to follow suit.
20
24. Questions and Answers
Type your questions into the “Questions” panel on the webinar
tool. Questions will be answered during Q & A, during the
presentations, or through the Questions panel.
Questions that are not answered during the webinar will be
addressed in a follow-up email.
24
28. Direct Contributions from IRAs
ExtendedThrough 2013
• Must be 70½
• Limited to $100,000
• Must be a direct cash transfer from IRA
to charity.
• Amount not included in donor’s
income.
• No charitable deduction.
28
29. Charitable Gifts at Death
• No step up on retirement assets.
• Top income tax rate 39.6% for single
taxpayers over $400,000 and $450,000
for married couples on withdrawal.
• Charity receives 100% by contrast.
29
31. Unified Credit
• Permanent extension of $5 million
unified credit “base” amount.
• Indexed for inflation; $5,250,000 for
2013.
31
32. Unified Credit
• Usable on lifetime gifts and/or transfers at
death.
• Exemption was previously capped at $1
million for transfers made during life—big
change.
• Carryover basis for gifts made during life,
though.
32
33. Annual Exclusion
• $14,000 per donee in 2013
• $28,000 if a spouse joins in the transfer
• Indexed for inflation
• No limit on the number of donees that a
donor may benefit.
• Must be a "present interest gift.“
• Carryover basis on gifted assets
33
34. Tuition and Medical Exclusion
• Must be paid directly to an educational
organization or organization providing
medical care.
• Tuition exclusion equals tuition only; does
not include books, supplies, dormitory fees
and rent.
• Medical expenses include general medical
expenses and medical insurance.
34
35. Estate and GiftTax Rates
• Estates – flat tax of 40% taxable estate
in excess of $5.25 million.
• Gifts – flat tax of 40% for aggregate
gifts in excess of $5.25 million.
35
36. Estate and GiftTax Portability
• To extent one spouse's unified estate
and gift tax exemption is not fully
used upon his death, it carries over and
may be used by his spouse upon her
later death to shelter assets from
estate tax.
• Cannot accumulate unified credit
amounts from multiple deceased
spouses.
36
37. GSTTax Rules
• Each person has a lifetime/death GST
exemption equal to $5.25 million
(2013).
• Flat tax of 40% on GST transfers in
excess of $5.25 million.
• No portability—critical consideration
• GST tax is imposed on top of
estate/gift tax.
37
38. Charitable Deduction
• No change – all property transferred to
a qualifying charitable institution will
be exempt from gift and estate tax.
38
42. A Changed Landscape
for Planning
• Only 1.4 of every 1000 estates will owe
any estate tax, or in reverse, 998.6
estates of 1000 will owe no estate tax.
• Doesn’t take into effect the “estate
tax” (income tax) from retirement
accounts, however.
42
43. A Changed Landscape
for Planning
• Only 3,780 estates expected to
owe estate tax in 2013.
• Anticipated “effective” tax rate of
16.6%.
43
44. Demographics of Wealth
• Only 3.1 million US millionaires in 2010 with
over $1 million in investable assets.
• 63% male, 37% female
• Only 40,000 Americans had a net worth of
$30 million or up in 2010.
• Only 13% of US households have a net
worth of $500,000 or more.
• Globalrichlist.com
44
45. PlanningTrends
• More emphasis on income tax planning
and lifetime gifts to charity than estate
tax planning and gifts at death due to
demographics?
• Retirement plan gifts at death to charity
still a powerful planning option.
• Fewer lifetime gifts to heirs due to
carryover basis, higher unified credit and
portability?
• Planning for GBLT couples
45
46. Questions and Answers
Type your questions and activity responses into the
“Questions” panel on the webinar tool.Questions will be
answered during Q & A, during the presentations, or through
the Questions panel.
Questions that are not answered during the webinar will be
addressed in a follow-up email.
46
47. ThankYou for Attending!
Please complete the survey that will arrive via email
to help us address topics that are of interest to you!
Contact us directly with additional questions:
Dana B. Perry
Chambliss, Bahner & Stophel, P.C.
Dperry@cbslawfirm.com
423.757.0228
Jennifer Spuehler
Gonser Gerber Institute
jspuehler@gonsergerber.com
630.505.8714
View additional upcoming webinars and workshops at our
website www.gonsergerber.com
47
W. King Copler
Chambliss, Bahner & Stophel, P.C.
KCopler@cbslawfirm.com
423.757.0269
