Whether or not your estate will be subject to estate taxes after you pass away depends on a number of factors, particularly the size of your estate and the steps you have taken to protect your assets in advance through proper planning. Effective tax planning can save your estate, and therefore your family, from losing millions of dollars to estate taxes. At the Law Offices of Clifford M. Cohen, we have the experience and mastery of the laws governing estate taxes to minimize your exposure to the unnecessary loss of what you have worked a lifetime to achieve, and protect your spouse, family and lasting legacy.
The American Taxpayer Relief Act (ATRA) Of 2012
Last year, in the nick of time, congress passed ATRA. Here are some of the highlights of ATRA as it pertains to estate taxes and gifting.
Estate Exemption. ATRA allows you to transfer $5.25 million without incurring any estate taxes. If you are married, the amount doubles, to $10.5 million.
Lifetime Gifting. ATRA retains the laws governing “unification” of estate and gift taxes, meaning the option to transfer $5.25 million upon death can be in the form of a gift.
Portability Remains. The term “Portability” refers to the opportunity for the surviving spouse to use the deceased spouse’s unused estate exemption. ATRA makes portability permanent, preserving the availability of the $10.5 transfer exemption. Portability, however, has limitations. For example, in order for the surviving spouse to make use of the unused exemption amount of the decedent spouse, an election must be made on the decedent’s federal estate tax return, which must be filed regardless of whether or not any estate tax is due.
Retained Estate Structuring Opportunities. The rules governing estate tax planning strategies like short-term GRATs and grantor trusts were not impacted by ATRA, nor was the unlimited Marital Deduction. ATRA also increases the cap on tax-free annual gifts to $14,000, up from $13,000 the year before.
Top Tax Rate. ATRA caps the top gift, estate and GST tax rate at 40%.
As you can see, there are still plenty of opportunities to shield your estate from estate taxes. However, while the tax laws embodied in ATRA have been called “permanent,” history tells us that the laws governing estate taxes change quite frequently. To take advantage of the opportunities that exist now, and plan for what the future may hold, contact your trustworthy Maryland Estate Tax Planning Attorneys at your earliest convenience for a free consultation.