One of many good reasons people consult with me on their Estate Planning is to try figure out a way to avoid “death taxes.”
By death taxes, what they usually mean is Estate, Inheritance, and or Gift taxes.
There are no “inheritance” taxes in Virginia (there is a very modest “probate” tax though)
For some time now, thanks to Bush-era tax cuts, there has been a very high exemption on Estate taxes and Gift taxes. As of December 2012, the exemption on estates was $5.2 million. In other words, if you estate was not worth that much, you didn’t pay any estate or gift taxes (if you inherited). And if you did have that much, the marginal tax rate was 35%.
That all changed last night. What changed? First and foremost, the exemption was apparently made PERMANENT.
<snip> “The Association for Advanced Life Underwriting is very pleased that the agreement brings permanence and certainty to the estate tax regime — which we have been advocating for over the last decade,” said David Stertzer, AALU president and CEO.
Under the agreement, U.S. estate tax law will provide a $5.12 million per-person exemption. The deal raises the highest tax rate from 35 to 40 percent but continues the current policy of reunifying the estate and gift taxes. All other current policies related to the estate tax will also remain in place.
“This provides a key tool for business succession planning, and helping preserve jobs and economic investment in the process,” Sterzer said. <bold emphasis added, dwg more at the link>
Since the House signed off on the deal as passed by the Senate in the wee hours of New Years day, and Obama has said he will sign it, looks like its a done deal.
So something’s more certain…. death and estate taxes. For now.
