Estate Tax Exemption is Law (for now)
When President Obama signed the “American Taxpayer Relief Act of 2012 [ATRA]” to avoid the fiscal cliff, he also confirmed the estate tax exemption at it’s current rate and rate adjustment factor ($5,250,000 per person or $10,500,000 per couple in 2013, to be increased every year) with a cap of 40%.
At least for now, financial planners and advisers will have a a formula to work with in helping high-net worth individuals and business owners to plan for the mitigation of estate taxes through trust-owned life insurance (TOLI) or life insurance owned by persons outside of the immediate estate in question.
The estate tax exemption in force from two years ago – with the exeption at $5mm/person – was set to expire Jan. 1, 2013. That would have caused the estate tax exemption to revert to the $1,000,000 exemption at a cap of 55%.
Making this exemption formula part of ATRA allows the exemption formula to move forward with it’s second increase, bringing it to it’s new $5,250,000per person, twice that per couple, as it was explained in the trades today.
Disclaimer: Nothing herein should be construed as legal or tax advice. Qualified legal and tax advisors should be sought before making any purchase of financial products that could have legal or tax consequences.
