Analysis of the Federal Estate Tax in the United States Free Essay Example, 1750 words

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. This can be especially worrisome if you have been remarried and have children with your first wife that you wish to leave the inher itance, as well as taking care of your second wife. We will write a custom essay sample on Analysis of the Federal Estate Tax in the United States or any topic specifically for you Only $17.96 $11.86/page 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 (Jacobs, 2010). This will allow an individual who is a new widower to have a ten million dollar tax exemption. Portability also applies to lifetime gifts and assets that pass through an estate plan. Lifetime and estate tax exemptions can be used as a unified credit to transfer assets at either stage or a combination. The portability is not automatic and the executor of the deceased will need to transfer any unused exemption to the spouse, who can then transfer them through gifts or as assets to their estate.