What is in this article?:
- Estate tax law kicks in major changes
- Another major change
• The law significantly reduced the possibility that the estates of most citizens will be required to pay an estate tax by raising the value of an estate that is not subject to the estate tax.
The United States Congress passed and President Obama signed into law on December 17, 2010 the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.
Included in this act were significant changes to existing estate tax law.
This law is effective until Dec. 31, 2012. Estate and business succession planning requires thinking many years into the future. Laws that are effective for only two years are not conducive to a long-term plan.
The law significantly reduced the possibility that the estates of most citizens will be required to pay an estate tax by raising the value of an estate that is not subject to the estate tax. For example, the estate tax exclusion was raised to $5 million dollars per person from $1 million dollars per person that would have been effective without this new law. Now, a married couple’s estate with assets valued at less than $10 million ($5million each) should not be required to pay any federal estate tax.
The gifting provision also changed significantly. A person can give away or “gift” assets anytime. The new law is more generous than previous ones, as gifting and the estate valuation exclusion are now unified at $5 million. For example, a person could gift $2 million dollars of assets during their lifetime and still have an estate worth $3 million dollars at death and not owe any federal estate tax. A person with an estate valued at $5 million could give it all away during their lifetime and not owe any federal estate tax. It should be noted that a gift greater than $13,000 given to any one person during a calendar year will require you to file a gift tax form with the Internal Revenue Service.