This year brings big changes to estate tax, making it more important than ever to engage in estate planning strategies. One of the primary changes is the exclusion amount which declines from $5.12 million to $1 million. Another is the tax rate which increases from 25 percent to 40 percent.
Not only do estate tax changes result in higher taxation, but also effect portability of the federal estate tax exemption for spouses. As of January 1, 2013 spouses will no longer be able to transfer the unused portion of their exemption.
Married couples ought to seek guidance from an estate lawyer to determine the impact of the portability provision. Any unused federal estate tax exemptions available to surviving spouses could be lost, so it is vital to determine if tax changes affect your current estate plan.