Estate and gift tax rules were set to expire in 2013 causing some individuals to go into a state of panic late last year. No one knew how their plans might be affected by the uncertain actions of Congress.
The estate plans only changed slightly, relieving taxpayers and planners. Up 130,000 from last year at $5,120,000, estate and gift tax exemptions will be $5,250,000 for the year 2013 and adjusted for inflation in future years. The top tax rate would have had a 55% rate for estates and gifts exceeding these amounts had Congress not acted, but because of their action, the amounts will be 40% which is up from 35% last year. The unused portion of the estate exemption will still be accessible to a surviving spouse of the deceased husband or wife.
Exemption applies to both inheritances and lifetime gifts. Whether the money is given away before of after you die, the cumulative combined transfer exemption will be $5,250,000. $14,000 can be given away annually, in addition. This can be done without tapping into your lifetime transfer tax exemption and given to as many recipients as you like.
People who are average and have estates much less than $5 million need an estate plan as well. A will is the backbone of your estate plan. It is an essential legal tool, intended to honor your final wishes. Plans of who will care for your children should you pass away, as well as, how the children can access their inheritance are contained in the will. Estate plans can also include charities of your choice. There are strategies to benefit both your family and charities.
Contact us and your attorney, to go over your estate plan today.