1. 2012 Maine Tax Forum Federal Estate and Gift Update Donna M. Ryan, CPA, J.D. Baker Newman Noyes, LLC 280 Fore Street, Portland, ME 04101 207-879-2100

2. 2 2012 $5,120,000 applicable exclusion amount 35% top rate 2013 (Scheduled) $1,000,000 applicable exclusion amount 55% top rate Federal Estate and Gift Tax

3. 3 Note: estate and gift systems reunified 2011 The $5 million opportunity by 12/31/12? Federal Estate and Gift Tax

4. 4 2010 Tax Relief Act brought us the concept of “portability” Permits surviving spouse to apply a deceased spouse’s unused exclusion to survivor’s own transfers during life or at death 2011 and 2012 ONLY at present Must file a federal estate tax return (Form 706) to elect

5. 5 Federal Estate and Gift Tax UP TO $5.12 million – smaller amounts can make sense, too. Annual gifting still powerful ($13,000 per donee limit 2012)

6. 6 Federal Estate and Gift Tax Grantor Retained Annuity Trusts Can work well to transfer wealth to heirs using little or no estate/gift exemption Ideal in times of low interest rates, depressed values for assets. Short-term, high income (or zeroed-out) GRATs soon to be a thing of the past?

7. 7 THANK YOU QUESTIONS?