Many small business owners are unsure of what the future holds for them. There is uncertainty regarding a wide array of federal regulations that have not yet come into effect, leaving them questioning whether they should expand or hire new employees. It is too unclear how much these regulations will cost the businesses. The tax rates are unknown. And the future of legislation will remain a mystery, at least until after the November election, but likely beyond.
Congress needs to find $1.2 trillion by the end of the year to avoid the potential sequestration cuts that are scheduled to take effect. In other words, Congress needs to cut the Federal budget by $1.2 trillion. However, to do so would require devastating cuts across the board, having a detrimental impact on all aspects of the government, including defense, national security, and core government functions.
According to the Congressional Budget Office, the estate tax increases that will go into effect on January 1st will potentially bring in $500 billion, over the next 10 years. The Democrats want these increases to go into effect in order to avoid the massive cuts. But the Republicans do not want these tax increases (and others) to go into effect. With opposing positions, and the lack of compromise between the two parties evident over the past few years when it comes to significant budget decisions, it will be interesting to see how this plays out over the next three months.
The article linked below has a good description of the recent history of the estate tax and the impact of the increases that will potentially take effect on January 1st.
Congress is getting ready to recess until rafter the November elections. Meanwhile, there is much unfinished business involving the Bush-era tax cuts that are set to expire at the end of 2012. Currently, there are no measures that will address any of these provisions.
Estate taxes in 2012. For 2012, individual estates are entitled to an exemption of $5.12 million. Amounts in an estate exceeding that amount are taxed at a 35% rate. This exemption amount has gradually increased over the past 10 years.
Estate taxes in 2013. Beginning January 1, 2013, the exemption amount for individual estates will revert to $1 million, with excess amounts being taxed at a 55% rate. Those are the same rates that were in effect in 2009. These rates are changing because the current estate tax laws are expiring at the end of 2012.
Congress may act to prevent the expiration of the current laws. However, time is quickly running out. They are about to recess for 6 weeks in advance of the November elections. There will also be a Thanksgiving recess and a winter recess.
It is possible that the next Congress will convene in January without any of these tax matters having been addressed. If that is the case, they will have to decide whether to pass new laws, whether these laws should be retroactive, and how to treat estates created between January 1, 2013, and the date any new law is enacted.
The best way to get ahead of Congress is to establish a personal comprehensive estate plan. Don’t wait to see how the law evolves. Act to protect your interests and your family before it is too late.
In the current climate of large national chains, both in retail and service industries, local small businesses are searching for ways to attract new customers and clients. Social media outlets such as Facebook, Twitter and FourSquare are being used more and more as a means of networking and expanding the client base. While the attached article shows that it does not always pay off, it is a networking tool that can be both inexpensive and not time-consuming.
Do you have a small business? Are you trying to grow your customer or client base? Try setting up a Facebook page, allowing customers to check-in. When that shows up in news feeds, your visibility increases. It is a quick and free method of getting your name out to your local public.
Not everyone realizes the importance of establishing a personalized estate plan. Some believe they don’t have enough assets. Others think the law will distribute their estate. However, the law is constantly changing, and there is a wide array of laws that applies to estates on both the Federal and state level. The only way to ensure your estate is handled as you desire is to establish a comprehensive estate plan.
State law determines where your assets and possessions go after you die, and sets the state estate tax.
Federal law determines the Federal estate tax. Right now, this is an area of future uncertainty. At the end of 2012 the current estate tax laws are set to expire. For 2012, there is an exemption amount of $5 million. Unless Congress acts before the end of the year, that exemption amount will revert to $1 million. As a result, many people who currently do not have estates that would be subject to estate tax will potentially be in a different position in just a few months. In Northern Virginia or Washington, DC, many people who own homes will have estates in excess of $1 million because of the high property values.
Establishing a comprehensive estate plan will ensure that your assets are handled the way you desire, in a manner that best suits your specific needs. Please contact me for a consultation to discuss your estate plan.