6 Reasons You Should Love New Estate Tax Laws

estatelawsThe last-minute tax deal cobbled together in Washington contained several key elements for estate planning. Now advisors can break the good news to wealthy clients:

Permanence

The estate and gift tax provisions of the American Taxpayer Relief Act of 2012 are permanent, as the “sunset” provisions of prior law have been eliminated. This permanence “is sure to be welcomed by taxpayers as a departure from the constant uncertainty surrounding federal tax policy over the past decade,” contends Rich Behrendt, director of estate planning for Baird’s Private Wealth Management group.

Magnitude

Without the new law, the federal estate tax exemption was scheduled to return to its previous level of $1 million, last seen in 2003. Now, the $5 million exemption amount is in place for the foreseeable future. Indexed to inflation, the exemption amount for deaths in 2013 is $5.25 million.

It’s true that the maximum estate tax rate is now 40%, up from 35% last year, but that’s still below the top 55% rate in effect as recently as 2001. The generation-skipping transfer (GST) tax also has a $5.25 million exemption this year, and a 40% maximum rate for larger transfers.http://www.financial-planning.com/news/6-Reasons-Advisors-Should-Love-New-Estate-Tax-Laws-2682690-1.html

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