For the first time in 12 years, the estate, gift and generation-skipping transfer tax law does not have a built-in expiration date in the United States. Congress has exempted all estates below approximately $5 million ($10 million for a married couple) from the federal estate, gift and generation skipping transfer taxes. That exemption amount increases with inflation. Amounts in excess of those thresholds will be taxed at a 40% rate.
Now that there is predictability to the law (“permanence” is probably too strong a word), you should review your estate plan to make sure it still works the way you intend. Most estate planning documents are driven by formulas and tax planning, and your plan may need to be updated to take the current law into effect. This advice is for individuals who have not reviewed their estate plans in recent years, and also for people who made large gifts in 2011 or 2012 to “use up” their tax exemptions before they were scheduled to expire on January 1, 2013.
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Topics: American Taxpayer Relief Act, Estate Planning, Estate Tax, Fiscal Cliff, Generation-Skipping Transfer, Gift-Tax Exemption, Income Taxes, Tax Exemptions
Published In: Finance & Banking Updates, Tax Updates, Wills, Trusts, & Estate Planning Updates
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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