Silver Financial Planner, Easy Money and Golden Years include estate projections as part of your clients’ financial plans. We are currently adding the new tax law changes included in the Taxpayer Relief Act of 2012 into the calculations for the estate planning reports. Here are three changes you will see in the estate planning section of the projections.
- Estate Tax Exemption Amount – The 2012 Act makes the federal estate, gift and generation skipping tax exemption amount of $5M permanent. The $5M exemption was put in place as a temporary measure for 2011 and 2012 as part of the 2010 Act. The $5M will be adjusted for inflation; the exemption increased to 5.12M in 2012 and is estimated to increase to $5.25M for 2013.
- Estate Tax Exemption Portability – The portability rules for a deceased spouse’s unused estate tax exemption amount (DSUEA) allow the deceased spouse to leave any unused exemption amount to pass to the surviving spouse. This was another temporary measure for 2011 and 2012 from the 2010 Act, which is now permanent.
- Estate Tax Rates – The top estate tax rate is 40%. Changes have been made to the estate tax table for estates over $500K, shown below. A flat 40% tax rate will be charged on all estate, gift and GST transfers that exceed the $5.25M exemption amount.
It’s also worth noting the annual gift exclusion amount was increased from $13,000 to $14,000 per donee to adjust for inflation for 2013. Remember, if your clients do not need estate projections as part of their plan, you can skip the estate input sections and exclude the estate planning reports from the projection using report selection. As soon as the new versions are available, we will post the information here and the program will notify you to update.