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Wednesday, January 9, 2013

American Taxpayer Relief Act of 2012 and Estate Tax

The American Taxpayer Relief Act of 2012 ("ATRA") contained several provisions related to the estate and gift tax. The hi-lights are as follows:

  • ATRA provides for a “permanent” $5.25 million (inflation-adjusted) exemption for gift, estate, and generation-skipping transfer (GST) tax. This provision will not "sunset" and is permanent. (unless a new law would change it in the future) This provision prevented  the exemption from reverting to $1 million.
  • ATRA implemented a permanent 40% gift and estate tax rate, up from 35%.
  • ATRA provides a permanent portable exemption between spouses, allowing the surviving spouse to make an election to take advantage of any unused portion of the estate tax exemption of the predeceased spouse. ATRA does not allow the GST tax exemption to be transferred to a spouse.