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What’s New in the Law in 2013?

Posted by on Jan 2, 2013 in Blog | 0 comments

Federal Estate Law Changes

Thankfully anxiety created by the fiscal cliff has been abated for estate planners. Huge changes were expected in both federal estate tax exemption amounts and the portability clause. Neither of which occurred.

At the eleventh hour, Congress passed legislation maintaining the status quo. Married couples may still pass unlimited gifts to their spouses tax-free, as long as the inheriting spouse is a U.S. citizen, Married spouses may also use their deceased spouse’s individual exemption amount to double their tax savings by transferring the deceased spouse’s unused exclusion amount to the surviving spouse within 9 months of the death of the spouse.

Estates valued at less than $5.12 million (adjusted for inflation) are exempt from federal estate taxes. However, one notable change is that estates valued at more than $5.12 million will be taxed at a higher top rate of 40%. The 2012 exclusion tax rate was 35%.

At the end of the day, with slight revisions, Congress essentially made permanent the system that has been in place for the previous two years. The anticipated major overhaul with tax consequences for the masses did not come to fruition.

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