What's Going On with the Estate Tax Issue?
Part of the dreaded fiscal cliff is the expiration of the $5.12 million per person estate tax exemption. Under current law, every person's estate pays a flat estate tax rate of 35 percent for assets in excess of $5.12 million. What that means in real numbers is that less than 2 percent of the estates of people who died in 2012 will pay any estate tax.
The $5.12 million estate tax exemption and 35 percent flat rate will expire on December 31, 2012, unless our government takes action otherwise.
If the expiration comes to pass, then on January 1, 2013, estate tax law will revert to the pre-2001 estate tax exemption and rates. The exemption amount will revert to $1 million and the tax rate will rise from 35 percent to as high as 55 percent. Incidentally, President Barack Obama's budget proposal includes a $3.5 million exemption and a flat estate tax rate of 45 percent.
As we've discussed in other articles recently, a trust may be an effective tax shelter to avoid estate taxes if established correctly and in a timely manner.
At Peterson Law Group, we have significant experience in estate planning and will use our experience to help you achieve your goals. Make an appointment to discuss your situation with an experienced Bryan, Texas estate planning attorney at the Peterson Law Group. To schedule a consultation, call us today at 979-703-7014 or 936-337-4681.