Happy New Year! As you have no doubt heard, on January 1, 2013, Congress passed a compromise bill to avoid the ‘fiscal cliff.’ Here’s what that bill does with respect to the estate and gift tax, as currently reported:
1) It raises the maximum estate tax rate to forty percent (40%) from the thirty-five percent (35%) rate of 2012.
2) It maintains the exemption from both estate and gift tax at $5 million, indexed for inflation from 2011, which means $5.25 million is excluded from lifetime gifts or estates of those dying in 2013.
3) It extends the portability provisions of the last law, which means that the surviving spouses of those who die in 2013 and after may make use of the unused exemption from estate tax left by the first spouse to die, provided they file a timely estate tax return claiming portability. This means that couples can make maximum use of both available exemptions for their families.