There is a rare opportunity available now to make use of the $5.12 million exemption for both estate and generation-skipping tax. This exemption probably will expire on January 1, 2013 when the “fiscal cliff” automatic spending cuts go into effect and the Bush-era tax cuts are repealed. For those with more than enough assets to meet their needs, you have an opportunity to remove assets from your estate tax-free along with the appreciation in those assets between now and the date of your death. The Tennessee legislature repealed its gift tax earlier this year, making this an especially good time to act. [Read more…]
The answer, not surprisingly, is it depends.
The “fiscal cliff” refers to the tax increases and spending cuts that will automatically go into effect in January 1, 2013, if Congress does nothing to stop it. One of the taxes that will increase is the federal estate tax, the tax paid from the estate of someone who has died. Not only will the estate tax rate go up from 35% to 55%, but the “exemption equivalent” or tax-free amount allowed for each individual will decrease from $5 million to $1 million. This has huge implications for those who pay this tax. [Read more…]
The “fiscal cliff” that you keep hearing about refers to the tax increases and automatic spending cuts scheduled to go into effect in January 2013. If Congress does nothing to keep these spending cuts and tax increases from going into effect, economists predict serious damage to our economy – hence the going-over-a-cliff metaphor. The scheduled changes include the end of the Bush era tax cuts, automatic spending cuts resulting from Congressional failure to reach agreement on cuts, and new taxes that help to pay for the Affordable Care Act. [Read more…]