The American Taxpayer Relief Act of 2012 (the Act), which was signed into law by President Obama on Jan.2, 2013, made permanent the $5 million exemption (indexed for inflation) for federal gift, estate, and generation-skipping transfer (GST) taxes and set the maximum rate at 40 percent (up from 35 percent in 2012) with respect to transfers in excess of these exemptions. The indexed amount for 2013 is $5.25 Million
The Act also makes permanent the so-called “portability” rules, which allow a surviving spouse to use a deceased spouse’s unused exemption from federal gift and estate tax (but not from GST tax). In addition, certain techniques that were threatened under prior proposals remain intact. In light of this new certainty on taxes and rates, as well as the continued viability of certain estate planning strategies, you may wish to take advantage of the following techniques as well as review your estate plans in light of the new legislation.
