| Estate Tax Clarification Needed |
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wooderson
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| Estate Tax Clarification Needed |
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Could someone clarify the difference between an "individual estate" and a "family estate"? I searched, but couldn't find anything.
Per the new tax law in the news this week:
"Estates would be taxed at a top rate of 40 percent, with the first $5 million in value exempted for individual estates and $10 million for family estates. In 2012, such estates were subject to a top rate of 35 percent"
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Wed Jan 02, 2013 4:16 pm |
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littleroc02us
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I'm wondering the same thing after reading the bill.
Risk comes from not knowing what you're doing. (Warren Buffet)
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Wed Jan 02, 2013 8:50 pm |
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clydewolf
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quote:
Originally posted by coaster
I'm thinking what's intended is the same meaning as "joint", but ... OTOH ... maybe it's something they put in there to keep all the lawyers fully employed and not eligible for the extended unemployment benefits. 
You are getting close.....It is also referred to as a portability provision. An example may demonstrate this the best.
Suppose we have a married couple with a combined estate worth $8,000,000. One spouse dies and has no estate tax to pay. The surviving spouse inherits the estate of the deceased spouse. The surviving spouse now has an estate of $8,000,000.
The surviving spouse's estate is now over the $5,000,000 threshold and would have the estate tax to pay on $3,000,000. But the $10,000,000 family estate exemption would allow the surviving spouse to use the unused exemption from the spouse that died earlier. This surviving spouse would use their own $5,000,000 exemption plus the unused $1,000,000 from the deceased spouse, giving the survivor a $6,000,000 exemption, using the entire $10,000,000 family estate exemption.
Note the deceased spouses exemption does not increase after their death, but the surviving spouse's exemption can continue to increase as the law allows.
That is probably an over simplification of this subject. I am sure there are some details left out of this explanation.
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Fri Jan 04, 2013 9:34 pm |
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wooderson
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Thanks, that makes perfect sense!
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Mon Jan 07, 2013 8:33 pm |
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