A series of tax rule changes that are scheduled to go into effect in the coming months promise to make 2014 a landmark year for estate planning. The changes to the tax rules affect only the extremely wealthy segment of the population. But if you happen to be in that category, it is a good idea to pay attention to the details.
In general, the 2014 changes affect individuals who have estate assets valued at or over $5.34 million or couples with assets valued at over $10.68 million. Individuals or couples with assets smaller than these amounts will be exempt from estate tax starting this year. However, if you, or your spouse have assets valued at more than the exemption limit, you could be subject to an estate tax of up to 40 percent. The exemption limits are substantially higher than the roughly $1 million exemption limit that used to exist previously. Meanwhile, the tax rate itself is somewhat lower than the 55 percent estate tax that used to exist before.
In addition to the revised exemption limits and tax rates, the new rules also give surviving spouses a way to “port over” a portion of their deceased spouse’s exemption limits. Changes have also been made to gift-tax exclusions, generation skipping transfers and to various state rules as well.
If you live in Phoenix, Arizona or nearby communities and have questions about how these changes impact your estate, please contact the estate planning specialists at Phocus Companies.
