Poyner Spruill LLP and Craig G. Dalton Jr.
Congress adopted the American Taxpayer Relief Act (the Act), effective January 1, 2013. The Act made permanent tax rates and exemptions for estate, gift, and generation-skipping transfer (GST) taxes. Prior laws incorporated “sunset” provisions for tax rates and exemptions that made long-term estate and gift planning difficult. The new law deletes references to sunsets.
Key provisions of the Act include:
The maximum estate, gift, and GST tax rates are 40%, up from 35% in 2012, but less than the 45% top rate proposed by the Obama Administration.
The estate, gift, and GST tax exemptions remain unified and at $5,000,000 per person, adjusted for inflation. For 2013, the exemption as adjusted is $5,250,000.
The concept of portability, which allows the unused estate and gift tax exemption of the first spouse to die to be used by the surviving spouse, has been continued under the Act.
The Act extended, through 2013, the ability to make tax-free distributions from traditional and Roth individual retirement plans to charity of up to $100,000 for individuals who have reached age 70½.
It is also important to understand what did not change as a result of the Act:
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If you’d like to discuss estate planning/asset protection, contact Laura Bianchi, Director RLG’s Estate Planning/Asset Protection Department., lbianchi@roselawgroup.com
