Let Our Attorneys Provide The Legal Help
Your Family Deserves

  1. Home
  2.  » 
  3. Inheritance And Estate Tax
  4.  » Congress extends 2010 estate-gift tax exemption amount indefinitely, P.2

Congress extends 2010 estate-gift tax exemption amount indefinitely, P.2

On Behalf of | Jan 4, 2013 | Inheritance And Estate Tax |

In our previous post, we began looking at the new fiscal cliff deal Congress came up with in the 11th hour, and the way it will affect estate planning in the coming year. As we noted, The same exemption amount will apply permanently, with adjustments for inflation, meaning that wealthy estates have less to pay in estate taxes.

The current exclusion amount of $5.12 may be used to transfer assets at death or during one’s lifetime, or a combination of the two. Those who surpass the limit will owe a tax of up to $40 on their estate. It is important to remember that the IRS expects taxpayers to keep records of their lifetimes gifts so that it is clear how much of the exemption has already been used up at the time of death. Couples, of course, can share the basic exclusion amount during life, through gift-splitting, and give more to their kids now. This still reduces the amount they will be able to gift tax-free at their death, either for their own use or to be carried over by the surviving spouse.

The new law doesn’t change the fact that there is still a yearly exclusion amount, which is currently $14,000 per year per beneficiary. This aspect of the law allows a married couple to give a joint gift of $28,000 to an adult child, as well as to the child’s spouse and to each grandchild. It is only gifts that exceed the limit that count against the lifetime exclusion.

So, given all of this, things haven’t drastically changes and the fears many people had have not come to fruition. It may not be worth it, given the new law, to take another look at your estate. That said, other changes in your life may warrant revisiting your plan, and this should be done on a regular basis anyway.

Source: Forbes, “After The Fiscal Cliff Deal: Estate And Gift Tax Explained,” Deborah Jacobs, January 2, 2012

Archives

has context menu