Estate Taxes

Congress has increased the exemption from federal estate tax to $5 million - at least until the end of 2012, when the exemption is currently due to expire.  Further, there is a new portability provision:  if a married person dies in 2011 or 2012 without using up his or her full $5 million exemption, the unused exemption amount is passed to the surviving spouse.  That would allow a spouse to leave as much as $10 million total, free of federal estate taxation. 

Annual gifting of a limited amount is still possible without using any of the lifetime gift tax exclusion amount.  For 2011, that amount remains $13,000  per gift recipient.  Husbands and wives may combine their gifts and give a combined total in 2011 of $26,000 to each recipient.  For 2011 and 2012, there is a lifetime gift tax exemption amount of $5 million.  (It was $1 million in 2010). 

If you are considering giving away appreciated assets now while you are still alive because the exemption is at $5 million, consider that under the 2011 and 2012 law, at your death, your assets are "stepped up" to their current market value, which means your heirs can sell the assets inherited at your death without owing capital gains income tax.  So perhaps you don't want to give away appreciated assets now that you might hold until your death.

Estate planning is a constantly changing area of the law.  If you have concerns about estate planning, or estate tax savings, contact Charleston and Atlanta estate planning attorney Karen S Hindson for assistance.