Monthly Archives: March 2011

NEW Estate Tax, Gift Tax, and Generation Skipping Transfer Tax Laws

 

            2010                 2011                 2012              2013
 Estate Tax
 Exemption amount *  $5.0 million  $5.0 million  $5.0 million (indexed for inflation)  $1.0 million
 Tax rate  Flat (35%)  Flat (35%)  Flat (35%)  Progressive (up to 55%)
 Elections  Can elect out of estate tax, but §1022 carryover basis will apply ($1.3 million “free-basis” + $3.0 million spousal bonus)  Can elect to add “deceased spousal unused exclusion amount” (basically, the unused exemption from the estate of the decedent’s last deceased spouse or the exemption amount in effect at the decedent’s death, whichever is less) to the exemption amount  Can elect to add “deceased spousal unused exclusion amount” (basically, the unused exemption from the estate of the decedent’s last deceased spouse or the exemption amount in effect at the decedent’s death, whichever is less) to the exemption amount  NoneNote that these estate tax laws may become political at the 2012 Presidential election, depending on the deficit and economy.
 Gift Tax
 Exemption amount  $1.0 million  $5.0 million (plus, if elected, the “deceased spousal unused exclusion amount”)  $5.0 million (indexed for inflation) (plus, if elected, the “deceased spousal unused exclusion amount”)  $1.0 million
 Tax rate  Flat (35%)  Flat (35%)  Flat (35%)  Progressive (up to 55%)
 Generation-Skipping Transfer Tax           
 Exemption amount  $5.0 million  $5.0 million  $5.0 million (indexed for inflation)  $1.0 million(indexed from 1997)
 Tax rate  Zero  Flat (35%)  Flat (35%)  Progressive (up to 55%)

*  Note the evolution of estate tax exemption amounts: $600,000 in 1997; $625,000 in 1998; $650,000 in 1999; $675,000 in 2000-2001; $1,000,000 in 2002-2003; $1,500,000 in 2004-2005; $2,000,000 in 2006-2008; $3,500,000 in 2009.               

copyright James J. Phillips 2011

President Obama’s February 2011 Assumption for 2013 estate tax exemption

In the “General Explanations of the Administration’s Fiscal Year 2012 Revenue Proposals” (Feb. 14, 2011), the Treasury Department explained how the President’s 2012 budget proposals presume several important changes in the estate, gift, and GST taxes.  These changes include restoring the 2009 estate, gift and GST tax rules on January 1, 2013.  These would include a top estate, gift and GST tax rate of forty-five percent (45%), a one million dollar ($1,000,000) gift tax exclusion, and a three million five hundred thousand dollar ($3,500,000) estate and GST basic exclusion amount, and making portability of the deceased espousal unused exclusion amount permanent.

See www.treas.gov/resource-center/tax-policy