The clock is ticking for wealthy people who may be affected by a change in tax rates effective Jan. 1.

That’s the day the federal tax exemption of $5.12 million on gifts to the next generation will reduce to $1 million and the tax rate on transferring funds from estates greater than that will grow from 35 percent to 55 percent.

There is a chance Congress could vote to increase next year’s gift and estate tax exclusion amount and lower the tax rate before year’s end, but attorney Barbara Bellin Janovitz, chair of the estate-planning group at Reminger Attorneys at Law, has many clients who aren’t willing to roll the dice on millions.

“Many couples are gifting $10.24 million before the end of this year. They see this next couple of weeks as a window of opportunity to remove $5.12 million from each of their estates tax-free while also removing the appreciation on the amounts gifted,” said Janovitz. “There’s only a week or two left for Congress to act, and it doesn’t seem to be a high priority for them, with the fiscal cliff looming. Congress is more concerned with income tax issues than estate tax issues, because income tax issues affect more people.”

Howard Rabb, partner at Dworken & Bernstein Co., also has clients who are transferring funds to beat the deadline, since there is no saying whether or when Congress might pass a new exemption and tax rate.

“People are taking advantage of the credit while it’s there, because they don’t know if it’s going to stay,” says Rabb. “The bottom line is, we don’t know what’s going to happen next year. That’s the rush.

 “For deaths occurring after Jan. 1, that’s bad news for someone who has $3 million to give to the next generation, because that person could only have the first million protected,” he said.

Both estate attorneys confirm that industry professionals can only speculate on what Congress will do in 2013, and they agree that for families with money to give, the time is now.

“If people have assets that are easy to transfer, they might have time to complete those transfers before the end of the year,” said Janovitz.

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