There have been significant changes to federal transfer tax laws due to the passage of the American Taxpayer Relief Act of 2012, especially in regards to estate planning. Therefore, it would be a good idea to make sure your estate planning documents are up-to-date while you prepare to file your taxes this year. Below are some highlights of the changes that may affect your estate planning:
- The federal tax exemption amount for estate, gift and generation skipping transfer tax purposes is set at $5,000,000 for 2011 and will be adjusted for inflation each year thereafter. This is a significant increase from the $1,000,000 exemption that was scheduled to occur in 2013 if the American Taxpayer Relief Act of 2012 was not enacted.
- The annual gift tax exclusion amount increased from $13,000 to $14,000 per year, per recipient.
- Most states impose an estate tax on estates with assets valued far less than the federal exemption of $5,250,000.
It is important that you review your current estate plan to see how you may be affected by these changes. Several other factors that may cause you to make changes to your current estate plan include:
- The death of a named beneficiary
- The addition of children or grandchildren
- If any of your beneficiaries have been diagnosed with a disability
- If you’ve recently been married or divorced
- If your assets have significantly changed
For more information on how the American Taxpayer Relief Act of 2012 may affect your estate planning, visit JD Supra Law News.