Reducing the Taxable Value of Your Estate
If your estate is valued above a certain amount, your heirs will be faced with the prospect of paying the federal estate tax. At the present time the estate tax exclusion is $5,120,000 and the rate of the tax is 35%. So the portion of your estate that exceeds the exclusion amount is subject to the 35% tax.
This arrangement is only in place through the end of this year however. The estate tax exclusion is going down to just $1 million and the rate is rising to 55% when the tax relief bill that was signed into law in December of 2010 expires at the beginning of 2013.
The estate tax is unified with the gift tax so this current $5.12 million exemption includes both your estate and any gifts that you give throughout your life. So, in light of the fact that the unified exclusion is being reduced at the end of the year it may be a good idea to consider giving gifts in 2012.
In addition to this, there is a $13,000 per person annual gift tax exemption that does not impact the lifetime unified exclusion. So you can give as much as $13,000 annually to any number of gift recipients free of the gift tax.
To develop an intelligent strategy that reduces the taxable value of your estate you're going to want to sit down and discuss your unique situation with a good Sarasota Estate Planning lawyer. This is especially important right around now with changes to the estate tax parameters looming just over the horizon.
ABOUT THE AUTHOR: Kevin Pillion
Experienced estate planning attorneys Sarasota FL of the Co-Executor PLLC offers estate planning and business planning resources to residents of Sarasota FL.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.