Estate Tax in 2014

Estate Tax in 2014

First let’s do a quick review and summary of the past few years.  The federal estate tax exemption amount for tax years 2010 – 2012 was based on an Act signed by President Obama in December 2010.  This law was drafted to end on December 31, 2012, which would have caused the federal estate tax exemption and rate to default to 2001/2002 amounts which were drastically lower exemption amounts.  To resolve this Congress passed the American Taxpayer Relief Act in January 2013, which made the laws surrounding federal estate taxes, generation skipping taxes and gift taxes permanent changes, subject to increases with inflation.

There were more than 40 tax provisions adjusted for annual inflation this year.  Included was the federal tax exemption amount for 2014 at $5.34 million.  The tax rate remains at 40% for those estates that are beyond the exemption amount.  Also, the gift tax amount has remained static at $14,000 per individual.

We are fortunate that right now these issues seem to have more permanence and this allows us to have more confidence in how to plan.  Unfortunately, we still cannot predict the future to know what Congress may change up later, when someone could become disabled or when someone will die.  So, in order to avoid court supervised proceedings, and regardless of the fairly high exemption amount, it is smart to be sure to have an estate plan and sure that plan is in-line with your current needs.

Wendy Lambie

Phone Number: 281-367-1222

Fax Number: 281-210-1361

[email protected]