Estate Taxes in 2014: New Rates Bring New Incentives
Wednesday, 29 January 2014
Changes to the 2014 estate taxes may dictate a new tax planning strategy to ensure the best financial legacy.Recent changes to tax laws create opportunities and challenges for estate tax planning this year. By staying informed about estate tax liability, you can ensure the best financial legacy for your family.
The good news starts with an increase in the amount that can be passed on to anyone but a spouse before estate taxes apply. After an adjustment to account for inflation, the current law sets the tax exemption level at under $5.34 million, up from $5.25 million in 2013. The tax rate for any amount over this year's threshold is set at 40% (the same as 2013).
You don't have to wait until death to give a monetary gift to your family members, and for high-wealth individuals it may be beneficial to start now. The gift tax exclusion has been set at $14,000 per year or $28,000 for a married couple. If you give a larger gift, it will count towards the $5.34 million exemption after death.
If one spouse dies before the other, and you have properly prepared appropriate Trust or estate documentation, the surviving spouse can count any unused portion of the estate tax exemption toward their own estate (known as "portability provisions"). This means that a married couple could pass along the full $10.68 million without penalty, even if the first death did not result in the full $5.34 million estate and the second one exceeds it. This only applies toward the Federal estate tax rate and not state inheritance taxes, which vary widely by state. Again, with appropriate planning and filing the required documentation, the savings can be substantial for your family.
A tax expert can work with you to help you learn which of your assets apply toward the estate tax. There are certain assets that could surprise your heirs, including payment of a life insurance policy, and they may put you into a higher rate than you realize. In some cases, it may still be worth creating trusts to reduce that tax liability.
For more information about individual, corporate and estate tax preparation and planning, contact Phil Ruben of Ruben Firsel & Ross LLC at (847) 582-9901 or visit www.rfrlegal.com.
About Ruben Firsel & Ross LLC: Founded in 2011, the law firm of Ruben Firsel & Ross LLC offers clients the counsel of highly experienced attorneys in an efficient, responsive boutique setting with reasonable and flexible fee structures. With extensive knowledge of corporate, real estate, securities, and estate planning law, the attorneys of RFR serve individuals and businesses of all types from its offices in Bannockburn and Chicago. For detailed information about RFR's practice, visit www.rfrlegal.com or contact firstname.lastname@example.org.
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