We recently reported on the fact that the budget agreement that was reached to stop the United States from going over the so-called “fiscal cliff” had some impact on the federal estate tax.
The maximum rate of the tax went up from the 35% that was in place last year to 40%. The exclusion stayed the same with a base of $5 million that was put in place for 2011 due to provisions contained within the tax relief act that was passed at the end of 2010.
There are adjustments for inflation however, and the 2012 adjusted exclusion was $5.12 million. When we initially passed along the news about how the deal affected the estate tax the IRS had not yet released the adjusted amount for 2013.
This information is now available to the general public. In 2013 the adjusted amount of the federal estate tax exclusion is $5.25 million.
The estate tax is said to be “unified” with the gift tax, and you would do well to understand what this unification means to you. The $5.25 million figure is a total exclusion encompassing taxable gifts that you give throughout your life and the value of the financial resources that comprise your taxable estate.
The way that the gift tax and estate tax are sometimes spoken about you may get the idea that there is a separate exemption for each, but in fact it is unified.
If you are concerned about your estate tax exposure the intelligent course of action would be to discuss your situation with a licensed and experienced estate planning attorney.