Popular Articles

Follow Us


Estate Tax Law Changes You Should Know About

As part of the broad extension of the Bush tax cuts that the President signed in December, laws affecting estate planning were also extended and expanded through the end of 2012. Here’s a quick overview of the primary changes.

1. Increased Exemption Levels: The federal exemption level for estate taxes rose to $5 million per person and important changes were made to the gift tax laws. Lifetime gifts were previously limited to $1 million per person; now the gift tax exemption equals the estate tax exemption at $5 million, meaning there is no longer a gift tax penalty for making lifetime gifts (but capital gains tax impacts may still be a consideration). The result of these changes is that very few Vermonters will be subject to the federal estate or gift taxes for the next two years.

2. Portabilty: The new law allows a surviving spouse to apply their deceased spouse’s unused federal exemption amount to their own. For example, if John Doe dies without having arranged to protect his federal exemption, his surviving spouse Jane Doe may add John Doe’s exemption to her own, giving her a larger combined exemption amount. This is a welcome development in estate planning, but as with most new laws, it’s unclear how it will work in practice, and there are numerous rules to follow, including having the decedent’s executor make a special election on the decedent’s estate tax return, even if an estate tax return would not otherwise be due.

3. Vermont Estate Tax: Vermont’s estate tax exemption amount rose from $2 million to $2.75 million in 2011, and is scheduled to increase again in 2012. However, Vermont is unlike other New England states because it disallows special tax elections to postpone state estate taxes until the death of the second spouse in some circumstances, so it’s important to incorporate flexibility into your planning to address the unique Vermont estate tax issues.

4. Options for 2010 Decedents: Because of the absence of a federal estate tax in 2010, Congress made special accommodation for 2010 decedents. Under the new tax law, executors of the decedent may elect to apply the 2010 law as it existed before the new law passed, or apply the new exemption levels. Most people will benefit under the provisions of the new law, but the wealthy will have to run the numbers to see which approach makes the most sense.

Final Note: The new law is effective only through the end of 2012. No one knows what the laws will be after that, so estate planning remains in a state of uncertainty. Because of the ongoing uncertainty, your plan must build in flexibility where possible.


Related Articles

Legal Action of Wisconsin: A Comprehensive Guide

Well, butter my biscuit and call me a cheesehead! When you think of Wisconsin, the first things that might pop into your noggin are...

Your Step-by-Step Guide: How to File a Lawsuit and Navigate the Legal Waters

Ever felt like you're drowning in a sea of injustice, and the only lifeboat in sight is the law? Well, you're not alone. Many...

The Law of Immigration: Dive into the Journey of Coming to the United States

So, you're itching to set foot in the Land of the Free, huh? Don't worry, you're not alone. Every year, countless dreamers, just like...

Should I Use Fake or Artificial Flowers at My Wedding?

Flowers are an integral component of every wedding ceremony and reception. Flowers create the ideal ambience and atmosphere on your big day with elegance,...

How do I know which bankruptcy lawyer is right for me?

No two bankruptcy cases or lawyers for bankruptcy are ever the same, making choosing an attorney an intricate task. When searching for one, the...

A Guide to Notary Services

What is a notary public? Notaries public are individuals appointed by their province to serve in the capacity of official witnesses for document signing. Notaries...

Probate Lawyers: What They Do and How They Can Help You

What Is a Probate Lawyer? What Is a Probate Lawyer? An attorney for probate is an official state-licensed lawyer who assists executors and beneficiaries to...

8 Tips for Finding a UK Immigration Lawyer You Can Trust

8 Tips for Finding a UK Immigration Lawyer You Can Trust It is not always easy to find an experienced UK immigration lawyer. Here are...

Property/Real Estate Lawyer

Property/Real Estate Lawyer Two primary functions are performed by real estate lawyers in the real-estate world. They can either be litigators or they handle the...
error: Content is protected !!