The Joint Select Committee on Deficit Reduction (the “Super Committee”), a 12 member bipartisan Congressional committee, is scheduled to announce its proposals on November 23rd for reducing the national deficit by at least $1.5 trillion over the next 10 years. The Super Committee proposals may include changes to the current estate, gift and generation-skipping transfer tax laws. Of immediate importance to you or your clients, we have heard rumors that the Super Committee may propose a reduction in the Federal gift tax exemption from the current $5 million exemption to $1 million. It is possible that the Super Committee may recommend these changes to become effective as early as November 23, 2011.
Although the rumor of an immediate reduction in the Federal gift tax exemption is unsubstantiated and information on specific proposals of the Super Committee is not yet available, the possibility of such a reduction has been widely discussed by practitioners around the country. Therefore, we wanted to share this information with you in the event you or your clients are considering utilizing your $5 million Federal gift tax exemption. Under current law, the $5 million exemption is scheduled to expire on December 31, 2012. However, the Super Committee proposals may seek to accelerate this deadline. If you or your clients are considering making any gifts in 2011, it may be advisable to complete these gifts prior to November 23rd, if possible. Additionally, you may want to consider accelerating gifts that you otherwise planned to make in 2012 to avoid any potential impact from the Super Committee proposals.