For people considering moving assets offshore, the new withholding tax under FATCA (Foreign Account Tax Compliance Act) which was scheduled to go into effect January 1, 2013 was a major planning milestone. That deadline, however has now been pushed back to January 1, 2014 to give foreign banks more time to comply with their new disclosure responsibilities.

Another, perhaps even more insidious deadline, however, is the pending expiration of the Bush tax cut "extensions". The Bush tax cuts were initially scheduled to expire December 31, 2010. In the last few days before the end of 2010, the tax cuts were extended for two years.

During 2010, the estate tax rates fell to zero under the Bush tax cuts but where also scheduled to end (meaning go back up to 55 percent) on January 1, 2011. The tax cut "extension" passed by Congress and the Obama Administration at the end of 2010 came up with new rates and exemptions for the estate tax beginning in 2011 which basically established a $5,000,000 exemption amount from both estate AND gift tax. This is important because the exemption from gift tax is essentially what people use when funding trusts for their children or grandchildren during their lifetime, while the estate tax exemption is levied at death.

Because it is indexed for inflation, the death and gift exemption this year is roughly $5,125,000 per person or $10,250,000 for a married couple. This gives people not only the ability to move assets down stream to future generations, but also to protect assets for themselves utilizing asset protection vehicles such as trusts. When these exemptions expire, the amount excluded from gift and estate tax will automatically revert to $1,000,000.

At the end of 2012, these exemptions will again expire unless Congress and the White House can come together with new compromise legislation. The chances of that happening in an election year are slim. Should President Obama win reelection, he has already indicated that he will expect higher taxes from the "wealthy" making further cuts or elimination of the estate tax remote. Alternatively, if President Obama loses his reelection bid, he will be operating as a lame duck President with a lame duck Congress and the chances of additional extension of the $5,000,000 exemption amount is even more remote.

What does all this mean to you?

If you have a net worth of over $1 million, the time to act is now. Create a trust, preferably an offshore trust, to move some of your net worth up to $5,125,000 or double that amount per couple. Not only will you be minimizing your future estate tax obligations, you'll protect the assets against frivolous lawsuits.

Finally, if you utilize your gift and estate exemption this year to fund a foreign trust, you'll solve another problem which is the looming 2014 FATCA deadline. By moving assets offshore to fund a trust now, you'll ensure that your transfer of funds will not be subject to the new 30 percent withholding tax on US bank transfers to non compliant foreign banks. While there is still another year to address this issue, the need to address the gift and estate tax is immediate and you have just four months left to do so.

So, time is indeed running out. Talk to your advisers and ask them how you can best position your assets ahead of these changes. Remember, this is not what "might" happen, it is what "will" happen. The law is already in place as is the sunset of the existing law. What is scheduled to happen next is set into law as well and can only be changed with a "proactive" new law. In light of the current atmosphere in Washington, the chances of such new compromise legislation are pretty close to zero.

The time to act is therefore now. Take action or find your future planning options severely limited.   If you’d like to meet me personally, plan a solution, and then execute it by years end, consider attending the Global Asset Protection Symposium where I will a featured speaker along with other experts who can create the perfect structure for you right on the spot.  Register or request information here.