Monthly Archives: October 2011

New Estate Tax Exemptions, Gift Tax Exemptions, Generations Skipping Transfer Tax Exemptions for 2012 and Beyond

 

  2010 

2011 

2012 

2013 

Estate Tax 

Exemption amount * 

$5.0 million 

$5.0 million 

$5,120,000 

$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 will be very political during the 2012 Presidential election. Only time will tell what happens with the so-called Bush Tax Cuts

Gift Tax 

Exemption amount 

$1.0 million 

$5.0 million (plus, if elected, the “deceased spousal unused exclusion amount”) 

$5,120,000 (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 

$5,120,000 

$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.

©JAMES J. PHILLIPS, P.C. October 27, 2011