McClellan Legal LLC Estate Planning & Tax Assessment Blog

Wednesday, January 16, 2013

Estate Planning After the Fiscal Cliff

The recent fiscal cliff legislation did very little to change the previous federal estate tax.  The only substantive change was to raise the estate tax rate from 35% to 40%, while maintaining all other 2012 rules. 

Therefore, the federal estate tax exclusion amount remains at $5,000,000 (adjusted for inflation to $5.25M) for 2013.  While many thought the federal estate tax exclusion amount would drop from $5M to $3.5M, nearly everyone expected the federal gift tax exclusion amount to drop drastically from $5M down to $1M.  This fear caused many planners to recommend making large gifts at the end of 2012.  However, the federal gift tax exclusion amount also stayed at $5M (adjusted for inflation to $5.25M).  

The only other change of note for 2013 occurred prior to the end of 2012, wherein the annual tax-free gift amount was increased from $13,000 to $14,000.  Therefore, in 2013, you can give $14,000 to any individual tax free. 

If you have any additional questions regarding federal tax planning, please call my office at 610.444.5552. 

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McClellan Legal LLC is located in Kennett Square and serves clients throughout the areas of Avondale, Chadds Ford, Coatesville, Downingtown, Landenberg, Oxford, Phoenixville, Pottstown, West Chester, & West Grove.

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