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This report sheds light on a little-noticed wrinkle triggered by possible new 2013 rate changes that will make some taxpayers no longer subject to the Alternative Minimum Tax (AMT). Wealthy taxpayers currently paying AMT may see their effective marginal rates rise by as much as 12.5 percentage points under the law now scheduled to go into effect in January 2013.

Many people are aware that the current federal gift and estate tax exemption of $5 million is scheduled to revert to $1 million at the end of 2012. Not only is the exemption set to drop, tax rates are slated to increase from 35 percent to a range that tops out at 55 percent. This means that a single person who makes a $5 million gift on December 31, 2012 would owe no tax. That same gift made on the very next day would result in millions of dollars in tax due. This combination of unhappy tax consequences makes a compelling case for those giving property away before year end.

This paper provides an analysis of the new 3.8% Medicare surtax set to take effect in 2013 and recommends planning strategies to reduce its impact. Atlantic Trust suggests several vehicles to mitigate the effect of this tax, including tax-exempt bonds, rental real estate, S-Corporations, Roth IRA conversions, charitable remainder trusts and installment sales.

It has been more than three years since the enactment of Sec. 877A, which introduced a mark-to-market tax on U.S. persons expatriating on or after June 16, 2008. Its introduction has impacted the decisions of many to attain a green card or citizenship. It can be costly for wealthy individuals to become a covered expatriate (as described below) and, consequently, taking steps to avoid becoming a covered expatriate has become a fundamental part of pre-immigration planning.

Time is of the essence. Significant wealth planning opportunities are set to expire at the end of 2012. It is critical for wealthy families that have taken a wait and see approach to the future of gift and estate taxes to formulate a plan now. Developing and implementing well thought out and properly structured wealth planning strategies takes months, not weeks.

In the past year, the IRS sharply increased the number of returns it audited, particularly those of high-income earners. According to a government official, this is an effort “to build public confidence in the tax system, encouraging voluntary compliance” and to make sure that both the low end and high end of the income scale are subject to the same rules. This paper reviews recent trends on how the IRS selects individuals for audits and how to be prepared for one.

The purpose of this paper is to explore some of the financial strategies that may increase the likelihood of enhancing traditional wealth transfer techniques. Since wealth engineering depends on a reasonable forecast of investment returns, this paper begins with a general overview of investment concepts and principles of diversification before examining some of the the most widely used financial instruments (GRAT, sales to IDGTs, etc.) to introduce the concepts of risk reduction and leverage beneficial to wealth transfer.

Choosing an executor is one of the most important decisions individuals make when preparing their will. This white paper explains the executor’s role and offers insights into how you might choose an executor for your estate.