The Leventhal Law Group - A Professional Corporation
Call Us : 818-347-5800
Toll Free : 877-90-WILLS


May 04, 2014

Estate tax is a tax imposed on the right to transfer property by inheritance and is assessed on the net value of a decedent’s estate before distribution to the heirs.

2013 brings changes to estate tax, making it more important than ever to engage in estate planning strategies.  One of the primary changes is the exclusion amount which declines from $5.12 million to $1 million. Another is the tax rate which increases from 25 percent to 40 percent.

On January 2, 2013, President Obama signed the American Taxpayers Relief Act (“ATRA”) into law.  Under the provisions of ATRA, portability of the estate tax exemption between married couples has been made permanent for 2013 and future years  Not only do estate tax changes result in higher taxation, but also effect portability of the federal estate tax exemption for spouses.  Portability of the federal estate tax exemption between married couples means that if the first spouse dies and the value of his or her estate does not require the use all of his or her federal exemption from estate taxes, then the amount of the exemption that was not used for the deceased spouse’s estate may be transferred to the surviving spouse’s exemption so that he or she can use the deceased spouse’s unused exemption plus his or her own exemption when the surviving spouse later dies.

Married couples should seek guidance from an estate planning attorney to determine the impact of the portability provision. Any unused federal estate tax exemptions available to surviving spouses could be lost, so it is vital to determine if tax changes affect your current estate plan.

Also, heirs who receive monies held in individual retirement accounts will be hit hard by taxes if they cash out instead of transferring funds to a new account. While you cannot control choices made by heirs, you can protect the IRA by designating beneficiaries instead of transferring ownership to a trust.

Since 2013 brings in several changes to estate tax it’s more important than ever to establish or update estate plans.  Working with a law firm, such as Leventhal Law Group, P, C, helps ensure assets are properly protected while minimizing estate and inheritance taxes. Call (818) 347-5800 or send an email to schedule a free initial consultation.

About the Author