The highlights of this new legislation, which was signed by the President on January 2, 2013, include the following:
Estate, Gift and GST Tax Provisions
1. Estate and Gift Tax Exemption: For individuals dying and gifts made after 2012, there will be a $5 million exemption, indexed for inflation. This exemption, adjusted for inflation, was $5,120,000 in 2012, and is estimated to be $5,250,000 for 2013, after adjusting for inflation.
2. Estate and Gift Tax Rate: The top estate, gift and GST tax rate is permanently increased to 40% in 2013, from 35% in 2012.
3. Portability of Estate Tax Exemption: The estate tax exemption will continue to be portable between spouses, which means that a surviving spouse can use the decedent spouse’s unused federal estate and gift tax exemption.
4. Gift Tax Annual Exclusion: The gift tax annual exclusion in 2013 is $14,000. In other words, that is the maximum amount a donor can transfer every year to each donee before reducing the lifetime exemption.
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