Last week President Obama offered his first go at the federal estate tax, which is tangled up in the whole fiscal cliff scenario playing out in Washington, D.C. According to news reports, his proposal is to have the federal exemption return to 2009 levels; $3.5 million, with a 45 percent tax. What does that mean? Anyone dying with an estate over $3.5 million would have a federal estate tax due, in the amount of 45 percent on the amount above $3.5 million.
If no agreement is met, the federal exemption will fall to $1 million, and I'd have to look up the tax rate. With no doubt, it would capture a lot more estates than the $3.5 million or the current $5 million.
As December ticks away my eyes will be on D.C., waiting and wondering what resolution, if any, will emerge. And then I can offer a bit more concrete guidance for my clients.
Thanks for reading, and remember, a blog is not a lawyer nor does it constitute legal advice. Please consult with an attorney in your state.