Following last Tuesday’s election, Congress returns next week for its “Lame Duck” session and new member orientation. The combination of automatic spending cuts and tax increases (including the estate, gift, and generation-skipping transfer taxes) set to occur at year end known as the “Fiscal Cliff” will dominate the session’s debate. On Wednesday, Senate Finance Committee Chairman Max Baucus (D-MT) and House Speaker John Boehner (R-OH) both called for a short term bill that would delay the Fiscal Cliff until late 2013 so negotiators have time to craft a broader package. On Thursday, the Congressional Budget issued a report saying that the Fiscal Cliff’s tax increases and spending cuts would cause the unemployment rate to rise to 9.1 percent by the fourth quarter of 2013, compared to a jobless rate of 7.9 percent in October 2012. On Friday, President Barack Obama invited congressional leaders of both parties to the White House next week for a formal meeting.
For ways to take advantage of the current gift and generation-skipping transfer tax rates, see our prior posts, 2012 Gift Tax Opportunities: Wait to Give, but Do Not Wait to Plan, Gifting Real Estate, a Comparison of QPRTs and Intentional Grantor Residenial Trusts and Estate Planning in 2012.