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Monday, June 10, 2013

Protecting the Portability of a Spouse's Unused Applicable Exclusion Amount Under ATRA 2012

Signed into law in early January 2013, the American Taxpayer Relief Act of 2012 was Washington's solution to averting the Fiscal Cliff.  Among other things, this act made the uniform exculsions and rates permanent.  In 2013, the Applicable Exclusion Amont is $5,250,000 for a single person and $10,500,000 for a married couple.  That means as a single person, unless your estate is worth more than $5,250,000 at the time of your death you will not owe federal estate taxes.  If married, no tax is due if your estate is under $10,500,000.  If your spouse passes away with an estate under $5,250,000 you can carry over their unused exclusion amount, also known as the Deceased Spousal Unused Exclusion Amount (DSUEA).  This is called portability, a concept introduced back in 2010.  However, in order to preserve the DSUEA, you must file an estate tax return making an election on IRS Form 706 even if no estate tax is due.  In addition to the .5% of the population that have taxable estates, it might be worthwhile to file the 706 for those who have estates close to exclusion amount just in case....it is the Summer of Recovery V after all.    I have to tip my hat to Joe Mitchiner, Esq. who gave such a great synopsis of ATRA 2012 at the WealthCounsel NC Forum meeting on May 31 in Greensboro.


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Based in Charlotte, NC the attorneys at Sanford Law Firm, PA assist clients throughout North Carolina including Charlotte, Monroe, Cornelius, Gastonia, Mecklenburg County, Cabarrus County, Lincoln County, Iredell County, Catawba County, Gaston County, Rowan County, Union County, Pineville, NC and Matthews, NC.



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