One of the interesting aspects of the recent election season was the efforts of pundits and talking heads to sound authoritative while they were making wild guesses about the presidential election, or merely expressing their own hopes about the outcome. As we saw, all of these purported experts were rendered obsolete by a few people with calculators who combined and analyzed the polls that were available to anyone who wanted to review them. We are now faced with another period of uncertainty, due to the imminent expiration of what are still called the Bush tax cuts (even though the former president has asked that they not be referred to by that name), together with the now-ubiquitous fiscal cliff, which political leaders are now scrambling to avoid.
Unfortunately, there are no experts to analyze in a scientific way the many opinions as to what will happen on January 1, 2013, and we are left with emails and newsletters in which predictions are made about next year’s tax law: Will the $5 million estate tax exemption remain, or will it be reduced to $3.5 million? Or will it by default be reduced to the $1 million level? Similarly, will the gift tax exemption, which is now equivalent to the estate tax exemption, remain tied to it, or will it be reduced to a lower level, as it was in prior years? Any such predictions, whether based on “inside” information or years of experience, are probably no better than a coin flip. Given that circumstance, what kind of planning will be available for clients in the next month and years beyond that?
