President Signs American Taxpayer Relief Act of 2012


On Wednesday, January 2, 2013, President Barack Obama signed into law the American Taxpayer Relief Act of 2012. The legislation increased the maximum federal estate tax rate, but otherwise made permanent many of the estate, gift and generation-skipping transfer (GST) tax provisions which were set to expire at the end of 2012.

For estates of decedents dying after December 31, 2012, the maximum federal estate tax rate has increased to 40%, up from 35% in 2011 and 2012. The estate tax exemption remains at $5,000,000, adjusted annually for inflation since 2011. In 2012, the inflation adjusted exemption amount was $5,120,000. In 2013, this amount is projected to be $5,250,000. The gift tax exemption and the GST tax exemption continue to equal the estate tax exemption ($5,000,000, adjusted annually for inflation since 2011).

The American Taxpayer Relief Act of 2012 makes portability a permanent part of the tax code. Several GST tax provisions, including the rules for deemed allocation of GST exemption and qualified severance are also made permanent.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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