One of the controversial aspects of the tax deal that was just completed had to do with the estate tax. The GOP got a lower rate than what Democrats had hoped for.But that’s not all.
An individual will also receive a $5 million tax-free gift exemption, up from $1 million currently, according to Bloomberg. A couple will be able to give $10 million to their children without any taxation.
Note: Individuals can give $13,000 tax-free each year without using up their lifetime gift exemption. Gifts over that level come out of the $5 million lifetime exemption.
After you die is when the rest of the tax breaks kick in. The estate pays 35 per cent on assets over the lifetime exemption, up from the 2009 rate of 45 per cent.
Altogether that’s why less than 0.5 per cent of Americans who die in 2011 will be hit by the estate tax, and they won’t pay much.
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