The 2012 Taxpayer Relief Act prevents steep increases in estate and gift taxes that were scheduled to occur for individuals dying after
2012. Specifically, it permanently keeps the lifetime exclusion amount at $5,000,000 for estate, gift and GST taxes (as indexed annually for inflation), which means for 2013 the applicable amount has been set at $5,250,000. Keep in mind that use of all or a portion of the lifetime gift tax exclusion will reduce the estate tax exclusion amount available at death.
The Act also continues the portability feature that allows the estate of the first spouse to die to transfer the decedent’s unused exclusion amount to the surviving spouse. The annual exclusion for gifting is set at $14,000 per person per donee for 2013 as well. However, the Act permanently increases the maximum tax rate at 40%, which is 15% less than what would have been imposed if this Act not been enacted into law.
Michael W. Margrave