On January 1, 2013 the Bush era tax cuts were set to expire. One dire consequence of this event was that the Federal Estate Tax Exemption amount was scheduled to be reduced from five million dollars to one million dollars if Congress and the President did not act.
Well, thankfully, they acted.
What Congress and the President did with regard to Federal Estate Taxes has, at least for the moment, provided us with some certainity, which has been lacking in the estate planning world for sometime now.
They have permantely fixed the Federal Estate Tax Exemption amount at five million dollars. What that means in simple terms is for a married couple, their joint community estate would have to be over ten million dollars for there to be a tax. They did raise the tax rate from 35% to 40% on such estates. And here is the key. They made this change permanent, only with the exemption amount being adjusted for inflation every year.
Now, the word "permanent "in Washington is not defined the same way as you and I would define the word. Congress has a way of always changing or amending "permanent" things. But for now, it seems a fair bet, that the five million dollar exemption will remain with us for s