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New Estate Tax Law Passed

The new estate tax exemption, signed into law by President Obama, is $5 million dollars per person. A married couple can pass on wealth of $10 million.

The law is retroactive to January 1, 2010. This means that any anyone owning total assets valued under $5 million at death will not incur an estate tax. Any assets exceeding $5 million dollars will be taxed at a 35% tax rate.

The new law is effective for two years. If Congress does not change the law by 2013 it will revert to a $1 million exemption and a 55% tax rate.

A unique feature of the new law is that if the first spouse to die has not used all of their $5 million dollar exemption then the estate of the surviving spouse (when that spouse dies) can use it upon their death.

The 35% tax rate will also apply to gifts made during life that exceed $5 million dollars. There is currently an annual $13,000.00 gift tax exclusion. This means an individual can make $13,000.00 gifts between January 1st and December 31st to an unlimited number of people without incurring a gift tax. A married couple receives double this benefit and can gift up to $26,000.00 per person per year without incurring a gift tax.

As your trusted advisor we want to ensure you timely take advantage of the estate planning options. If your gross assets exceed $5 million dollars please call our office immediately to arrange a consultation to discuss your estate plan.

Even if your estate is valued under $5 million dollars it is still important for you to consult with a probate attorney so that your assets pass outside of probate and a plan is created to avoid guardianship in the event of your physical or cognitive incapacity.

We are pleased to extend a courtesy discount on the consultation to you and those whom you refer to our office.