The answer to this question is actually both yes and no. As an overview,
the Federal estate tax is a tax on your right to transfer property at
your death. The fair market value of all assets in your estate, less the
estate tax exemption and any lifetime gifts exceeding the gifting exclusion
made, used to compute this tax. As far as the tax rate, the assets valued
in excess of the tax exemption are taxed at about a forty (40%) percent tax rate.
Now to answer the question, in 2012, the IRS established tax provisions
that set the Federal estate tax exemption to five (5) million dollars.
The IRS further stated that each year, the exemption amount is to be adjusted
for inflation. That means, each year the Federal estate tax remains at
five (5) million dollars, however, the figure is adjusted for inflation
making the figure larger or smaller than the preceding year depending
on the economy.
For instance, in 2012, the Federal estate tax exemption was $5,250,000.00.
In 2013, the Federal estate tax exemption went up to $5,250,000.00 due
to inflation. The same occurred in 2014 making the Federal estate tax
exemption $5,340,000.00 for individuals passing in that year. Last year,
the Federal estate tax exemption was $5,430,000.00. Finally, the Federal
estate tax exemption, accounting for inflation, is currently $5,450,000.00.
That being said, it is important to continue to check the Federal estate
tax exemption amount on a yearly basis because the IRS can easier reduce
it back to one (1) million or less, like it was in pre-2001 years. Equally
important is making sure your estate planning is updated in accordance
with the yearly changes so that your estate does not incur a forty (40%)
For more information on Asset protection, Estate planning, Business Law
and/or Probate please contact the attorneys of The Presser Law Firm, P.A.