We currently have a $5.25 million unified exclusion that applies to your estate and the taxable gifts that you have given throughout your life. The maximum rate of the estate tax and the gift tax at the present time is 40%.
These parameters were supposedly “permanently” put into place after the passing of the American Taxpayer Relief Act of 2012 at the end of last year. However, estate planning attorneys cautioned people to keep a close eye on the matter because nothing is really permanent when it comes to legislation because changes can always take place.
We are now hearing that possible changes may be afoot. In the proposed 2014 Obama budget there is an increase to the estate tax.
Under the terms of this proposal in 2018 the estate tax parameters would revert back to their 2009 levels. This would result in a $3.5 million exclusion for the estate tax, a $1 million gift tax exclusion, and a 45% maximum rate.
We will see if this proposed hike does in fact become reality.
The estate tax is something that can truly have a devastating impact on the financial future of those that you love. The good news is that there are steps that can be taken to position your assets with tax efficiency in mind.
The best way to proceed will depend on your unique circumstances and your vision for the future. If you discuss everything with an estate planning attorney who has a background assisting high net worth clients you will get personalized attention.
In the end you will emerge with an intelligently constructed estate plan that is tailor-made to suit your specific needs.