By Amy Feldman
(Reuters) – After years of changes and political arm-twisting, the federal estate tax rules became clear and stable with the year-end fiscal cliff deal. They are now set permanently into the tax code – at least until the tax code changes again.
The amount an individual can exclude from estate taxes (including gifts given during his or her lifetime) is an extremely generous $5.25 million per person for 2013.
That leaves very few people who will be subject to the tax. After all, a couple could exclude $10.5 million from estate or gift taxes, and with smart estate-planning – putting assets into an irrevocable trust, for example – pass on many times that amount tax-free to the next generation. The result: Just 3,800 estates are expected to be big enough to owe any federal estate tax in 2013, according to estimates from the Tax Policy Center.
That is a relief to many would-be estate tax payers. Without the year-end tax agreement, the exclusion was slated to revert to $1 million per person — an amount that worried homeowners in high-priced real estate markets like New York and Los Angeles — with a 55 percent tax rate on most estates.
The new top tax rate for estates is 40 percent.
If you’d like to discuss estate planning/asset protection, contact Laura Bianchi, Director RLG’s Estate Planning/Asset Protection Department., lbianchi@roselawgroup.com
