January 8, 2013
Last week, the U.S. Congress passed the American Taxpayer Relief Act of 2012 (ATRA), thereby cementing the Bush-era estate tax rates. For estate tax purposes, this means the following:
1. The unified estate tax exemption amount will be 5.12 million dollars per person, indexed for inflation in the future.
2. The maximum estate tax rate will be 40%.
3. Gifts made above the annual exclusion amount of $14,000 per person will be taxed at 40% and deducted from the unified 5.12 million dollar exemption.
4. The executor of a deceased spouse's estate can transfer any unused estate tax exemption amount to the surviving spouse.
The best part of the ATRA is that, unlike past estate tax laws, this law is permanent and will not expire at a future date. This allows your estate planning professionals greater certainty in planning for your estate.
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