Whether you are preparing your estate plan or dealing with an estate after someone close to you has passed away, if that estate is substantial, federal estate laws must be considered. As per current federal law, estates valued at over $5.34 million are subject to federal estate taxes. Edward L. Armstrong, P.C., your St. Louis federal estate attorney, is here to ensure that you understand the law and how it affects your estate planning goals.
Federal Estate Tax Exemption
According to the law passed on January 2, 2013, the current federal estate tax exemption is $5.34 million in 2014, and it will adjust for inflation. In addition, married couples are able to divide their estate between themselves, if they follow very specific rules when the first spouse passes away. This allows married couples to have as much as $10.68 million together.
Gift Tax Exemptions
For estates valued beyond the federal estate tax exemption limit, other exemptions are available, but only if the money is handled in a specific way. A St. Louis federal estate attorney can help people make the right choices about their estates to avoid federal taxes.
One such exemption option is the gift tax exemptions. Individuals can give money away before they die and avoid paying federal estate taxes on that money. Annual limits of $14,000 for individuals and $28,000 for married couples apply to this exemption. Gifts beyond this are taxed with a top tax rate of 40%.
Generation-Skipping Transfer Tax Exemption
The generation-skipping transfer tax is another way that large estates can be taxed. When property passes one from generation, but skips one or more generations between the giver and the recipient, the transfer is subject to additional taxes. Exemptions for this type of transfer are the same as for the gift tax and the overall estate tax.
Portability for Spouses
Another factor that comes into play with federal estate taxes is the idea of portability between spouses. Under the current estate tax law, spouses can combine their estate tax exemptions if one spouse dies before the other. However, the spouse who remains behind must file an estate tax return to prove the portability. Because this can be a complex process, and it has to occur during a time of grief, it’s best to work with a St. Louis federal estate attorney to ensure that this process is handled correctly.
Edward L. Armstrong, P.C. has been serving the people of St. Louis since 1988, offering federal estate planning law services to help high net worth individuals take the right measures to protect their assets from high federal estate taxes. Contact Edward L. Armstrong, P.C., to benefit from our comprehensive knowledge as you work to protect your assets.