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Analysis of the Federal Estate Tax in the US - Research Paper Example

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The paper "Analysis of the Federal Estate Tax in the US" states that with the Federal estate tax being raised to five million a person married couples can now add unused state tax exemptions from their spouse, deceased from December 31, 2011, forward to their own…
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Analysis of the Federal Estate Tax in the US
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Download file to see previous pages The default estate tax rate provided an exemption of five million dollars or ten million for married couples with a tax rate of thirty-five per cent. Property value was increased or decreased according to the fair market value (Sarje, 2011).
As an alternative and because of the Economic Growth and Tax Relief Reconciliation act there was no estate tax for descendants of those who died in 2010. If this was chosen by the executor assets in the estate received modified carryovers. The alternative was short-lived, going from 0% in 2010 back to a rate of 35% in 2011. The gift rate is now also a maximum of 35%, in sync with the estate tax (Ransome, Shafer, 614). The gift tax and estate tax exemption are now five million for individuals, an increase from the one million alternative tax exemptions in 2010. This provides benefit to those used to receiving charitable gifts upon individual’s deaths as it is now just as beneficial for individuals to make gifts during their lifetime. Though it was much more advantageous to do so after death before this time they are now more in sync. Some advisors are telling their clients to make very large gifts now, as we do not know what will happen in 2012 (Fried, 2011). No matter the tax change in 2012, gifts are given today would still be left out of your estate.
It is also suggested that those who may be at risk for malpractice suits should shield up to 5 million in assets by placing them in special trusts. This is also a great opportunity for same-sex couples or those who are unmarried. The major concern or risk is accidental disinheritance. Many people leave inheritance with a formula type of rule, stating they leave however much is not subject to federal income tax withholding to an individual, with the remainder going to a second individual. Now with that amount being so much higher, the first individual is getting a much larger amount, possibly leaving nothing for the second individual.  ...Download file to see next pagesRead More
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