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Estate and Gift Tax Exemption to increase in 2012

11-13-2011 - The lifetime unified federal estate tax and gift tax exemption will increase from $5.0 million per individual to $5.12 million per individual, effective January 1, 2012.  

The current estate tax law will expire on Dec. 31, 2012. Unless Congress acts, the estate tax will revert to $1.0 million as of Jan. 1, 2013.At that time, the portability provision will also expire: Surviving spouses will no longer be permitted to use any unused portion of the deceased spouse's exclusion. The top tax rate will rise from its current 35% to 55%.  

Given this year's generous exemption, clients with taxable estates - or estates that will likely be taxable if the current law is permitted to expire in December - should consider embarking on a gifting program to remove taxable dollars from their estates and pass as much tax-free money as possible to loved ones.

The annual gift tax exclusion will not change in 2012;  i.e.,  an individual may continue to give away up to $13,000, gift-tax free, to as many individuals as he wishes.

More about estate and gift taxes here.

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