Federal Estate Tax Update
As previously posted, the new Federal Estate Tax is at 40%. For 2013, the IRS has indexed the estate tax credit at $5.25 million dollars. This means an individual with less than $5.25 million dollars does not have to pay Federal Estate Tax on his or her assets.
The visual summary above gives you a breakdown of Estate Taxes for 2012 and 2013.
There is also a concept known as Portability. Portability allows a husband or wife to transfer upon death his or her unused Tax credit. Effectively, this provides a married couple a $10.5 million dollar tax credit for 2013.
The visual summary above explains the concept of Portability.
Ohio Estate Tax Law Update
For Ohio, the Estate Tax is abolished completely. It is important to note, the Ohio Estate Tax will still apply for those who died in 2012 even if the estate is put through Probate in 2013.
I have provided a visual summary of the Ohio Estate Tax.
Federal Estate Taxes
Congress and the president, on January 1, 2013, reached a deal that averted a potential increase in the Estate Tax. This agreement avoided the "Fiscal Cliff"; which would have resulted in a considerable tax increase.
Based on reports, approximately the first $5 millions in an individual's name at the time of death will pass free of Estate Tax. For married couples, there is Portability of this credit. Portability allows one spouse, upon his or her death, to transfer any unused credit to the surviving spouse. For married couples, the effective Federal Estate Tax credit is approximately $10 million.
Any amount owned at the time of death in excess of the Estate Tax credit will be taxed at a rate of 40%.