Many of my clients are asking about the federal estate tax. This is one of the Bush tax cuts set to expire at the end of this year, contributing the fiscal cliff we are hearing so much about.
Here’s what will happen on January 1st: The current $5.12 million per person exclusion from the federal estate and gift tax will go back to $1 million and the tax on the transfer of wealth will go from 35% up to 55%.
Some believe that since the estate tax exemption has never gone down, it will only dip temporarily and then Congress will likely let it stay where it is. Others believe that since our government is in desperate need of more tax revenue, it will likely fall back to the 2011 exemption of $3.5 million. (This is favored by President Obama)
I would expect Congress to also extend the special tax break for married couples that is scheduled to go over the cliff. This is also known as portability.
Remember, the estate tax is based upon your gross estate when you die. That includes life insurance proceeds payable to someone else and your retirement funds. Most of us are worth more dead than alive, so if you have the potential to pay an estate tax, now is the time to visit our office to learn about your estate planning options. Don’t wait until it’s too late.
Debra G. Simms
Attorney at Law
Orlando
Daytona Beach
Toll Free: 877-447-4667
