Estate attorneys and planners worked feverishly during the final months of 2012 to help families beat changes in inheritance tax laws. If you missed out, there are still ways to limit the potential tax bills of your heirs — including gifting a portion of your assets beforehand — provided you plan ahead.
Death is an unsavory thought for most everyone but the myriad financial emotional and halachic complexities that can haunt spouses children and other heirs due to improper estate planning are far less desirable.
The deal reached in Congress to avoid falling off of the fiscal cliff included an increase in estate taxes from 35 percent to 40 percent for estates valued at $5 million or above per person. This percentage excludes any applicable state taxes.
While $5 million sounds like a large estate it is relatively common considering high real estate values and the fact that every one of the decedent’s assets including the home they live in investment properties bank and brokerage accounts stock and bond certificates socked away in a safe or under a mattress and silver and jewelry must be counted toward the estate value under the penalty of perjury. While Congressional action prevented the estate tax exemption from reverting to its former level of only $1 million politicians eager to raise taxes on the wealthy are likely to revisit this issue at some point in time.
Willful Thinking
The exemption from estate taxes applies to the assets bequeathed by each individual who dies.
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