An individual who died during 2012 with as much as $5 million (adjusted for inflation) in his or her estate would have ZERO federal estate tax against the estate. If Congress doesn't take action (wanna place bets on that?) that esate-tax-free amount will automatically drop to $1 million in 2013!
Think of that dollar amount as a nice little box you have. The IRS won't take any estate taxes out what you can fit in your box. In 2012, you had a box that could fit $5 million. Tonight at midnight, your box will (presto!) magically shrink to $1 million, and everything that doesn't fit comes busting out for the IRS to measure and tax at rates as high as 55%.
What's that you say? "Holy moly"? Just wait! There's more!
First, be aware that your "estate" for tax purposes may include items you haven't thought of, a big one often being life insurance benefits. That $1 million life insurance policy you have might suddenly fill up your entire little box!
Second, another automatic 2013 change is that spouses will no longer automatically share eachother's credits. In other words (going back to the "box" allegory), if a spouse died in 2012 and still had unused space left in his box, the other spouse could use that extra space for her estate. We call this "portability." The result: a married couple with as much as $10 million ($5 million for each spouse) had no estate tax with little or no tax planning work. For 2012, married couples may need tax planning work to make sure both spouses maximize the use of space in their own boxes.
The bottom line: if you or someone you know may pass on $1 million or more at death, watch the estate tax in the news and visit with an attorney in 2013!
Sponsor Message: Stasny Law Firm| Serving the Brazos Valley Since 1977| http://stasnylawfirm.com/
[This message has been edited by Stasny Law Firm (edited 12/31/2012 9:50a).]
[This message has been edited by Stasny Law Firm (edited 12/31/2012 10:20a).]
Think of that dollar amount as a nice little box you have. The IRS won't take any estate taxes out what you can fit in your box. In 2012, you had a box that could fit $5 million. Tonight at midnight, your box will (presto!) magically shrink to $1 million, and everything that doesn't fit comes busting out for the IRS to measure and tax at rates as high as 55%.
What's that you say? "Holy moly"? Just wait! There's more!
First, be aware that your "estate" for tax purposes may include items you haven't thought of, a big one often being life insurance benefits. That $1 million life insurance policy you have might suddenly fill up your entire little box!
Second, another automatic 2013 change is that spouses will no longer automatically share eachother's credits. In other words (going back to the "box" allegory), if a spouse died in 2012 and still had unused space left in his box, the other spouse could use that extra space for her estate. We call this "portability." The result: a married couple with as much as $10 million ($5 million for each spouse) had no estate tax with little or no tax planning work. For 2012, married couples may need tax planning work to make sure both spouses maximize the use of space in their own boxes.
The bottom line: if you or someone you know may pass on $1 million or more at death, watch the estate tax in the news and visit with an attorney in 2013!
Sponsor Message: Stasny Law Firm| Serving the Brazos Valley Since 1977| http://stasnylawfirm.com/
[This message has been edited by Stasny Law Firm (edited 12/31/2012 9:50a).]
[This message has been edited by Stasny Law Firm (edited 12/31/2012 10:20a).]