What will happen with the estate tax exemption in January?
Right now is a frustrating time to do any estate planning. If a person passes away in 2012, that person can pass a little over $5 million in assets without paying any federal estate taxes. Married couples can combine the exemption for a total of a little over $10 million. However, that is all set to change in 2013. With the law as it’s written now, if a person passes away in 2013, he or she can only pass $1 million free from estate taxes. That $1 million exemption can’t be combined with a spouse’s exemption without doing special planning. And the worst part is the tax rate – 55 percent!
Although you may not be concerned about your estate because it’s under the $1 million exemption, you might be surprised. Your taxable estate when you pass will include life insurance proceeds, 401k’s and IRA’s, your home, and all other assets. It’s not uncommon for a middle class person to accumulate over a million in assets, and now those people could be facing an estate tax bill.
However, most estate planning attorneys and experts in the field believe that the exemption amount will be raised and the tax rate will be lowered. With only 24 days left in December, the clock is ticking. Although you may have been bombarded with news about the “fiscal cliff” and raising income tax rates on the middle class and the wealthy, the estate tax is a small piece of what will be negotiated in Washington.
If you are concerned about your estate plan and estate taxes, call Sarah White, Marietta, Georgia estate planning attorney at 678-453-6490. I will help you plan your estate to give you peace of mind about your future and your family’s future.