We would like to share the outcome of the fiscal cliff compromise as it applies to the estate tax here so that you can understand the playing field going forward in 2014.
As it turns out the maximum rate of the estate tax went up, but the increase is not going to be as damaging as the 55% top rate that was looming. Going forward the maximum rate of the federal estate tax will be 40%.
The basic exclusion amount will remain where it has been since 2011, and this figure is $5 million. However, there are adjustments for inflation that are implemented each year if they are warranted.
As a result the estate tax exclusion was $5.25 million throughout 2013. As of this writing the adjusted amount of the exclusion for 2014 has not yet been released by the Internal Revenue Service.
The estate tax is unified with the gift tax, so the lifetime gift tax exclusion is unchanged as well. The $5 million figure plus adjustments for inflation will also hold sway for the generation-skipping transfer tax.
And finally, the estate tax exclusion will remain portable between a husband and a wife. This means that your surviving spouse could use your exclusion as well as his or her own after you pass away.
Understanding where you stand with regard to the estate tax is an essential part of estate planning for people who have been able to accumulate a good bit of wealth. To learn more about estate planning and why it is important simply take a moment to download our free report: Free Hartford Estate Planning Report
Mr. Nirenstein is licensed to practice before the courts of the State of Connecticut and the United States District Court. He is a member of the Connecticut and Hartford County Bar Associations, and the Estate and Probate, Elder Law, Business Law and Real Estate Sections of the Connecticut Bar Association.
- IRS Announces Gift and Estate Tax Increases for 2024 - November 23, 2023
- Schedule an Estate Plan Review with the New Year Approaching - November 7, 2023
- Estate Administration: Navigating the Critical First Steps - October 19, 2023
