With the recent agreement over the much talked about Fiscal Cliff, Congress has come to a resolution on new estate tax provisions for 2013. Under the new law, the life-time exemption amount remains $5.0 million. The exemption will also be adjusted for inflation each year going forward. This means in 2013, the inflation adjusted amount is $5,250,000.00 for individuals and $10,500,000.00 for married couples.
Less generous was Congress’s treatment of the maximum estate tax rate. The maximum tax rate for estates increased from 35 percent to 40 percent under the new law. However, although Congress did raise the maximum tax rate 5%, the increase it is not nearly as severe as the 20% increase which would have automatically gone into effect had Congress not reached an agreement.
Finally, Congress has made the portability provisions of the Bush Tax Cuts permanent. Portability allows married couples to use their spouse’s unused life-time exemption amount after their death. This effectively means that married couples, with proper estate tax planning, can pass $10,500,000.00 free of estate taxes at their death, regardless of which spouse ultimately transfers the property.
If you have questions regarding the estate tax and how it could effect your estate plan, contact the experienced attorneys at Ford + Bergner today.