Answering Unified Tax Questions
The estate tax and the gift tax are unified under the tax code. We would like to provide a basic
explanation with regard to what exactly this means to you.
You cannot simply give gifts while you are alive in an effort to circumvent the estate tax. There is a
federal gift tax in place as well and it carries the same rate as the estate tax. Right now this rate is a flat
35%, but it is going up to 41% to as much as 55% at the end of the year. (And no, that is not a typo.
The tax will take more of the taxable portion of your estate in 2013 than under currently existing
There is a lifetime unified exclusion however, and this is why many people are not exposed to these
federal levies. As of this writing in 2012 the exclusion is $5.12 million but it too will change in 2013. At
that time the exclusion will be reduced to just $1 million.
So assuming the estate tax exclusion was $1 million, if you give $500,000 in gifts during your life only
the first $500,000 of your estate could pass to your heirs before the estate tax is applied.
Keep in mind, however, that there is an annual exemption. You can give as much as $13,000 each year
to any number of gift recipients without gift taxed, and the utilization of this exemption does not
affect to your lifetime exclusion.
This is a brief overview. To gain more details, simply arrange for a consultation with a good
Reno/Tahoe estate planning lawyer.
Experienced estate planning attorneys Reno NV of the Anderson Dorn & Rader Ltd offers estate
planning and business planning resources to residents of Reno NV. To learn more about these free
resources, please visit www.wealth-counselors.com/ today.