New federal estate tax rules

By February 8, 2011Uncategorized

Some time ago, we posted a discussion on the federal estate tax rules.  We mentioned that while the Arizona Probate Code does not impose an estate tax, personal representatives should nevertheless be aware of the federal estate tax, as they are sometimes responsible to pay this tax from a probate estate.  When we discussed this last, the federal estate tax had been repealed for 2010, but was set to reinstate so that estates valued at over $1 million would be subject to a 55 percent estate tax beginning in 2011.  As you may or may not know, however, Congress stepped in and changed the federal estate tax quite substantially.

Before the beginning of the year, Congress implemented new federal estate and gift taxes.  Under the new law, only estates valued at over $5 million are subject to the federal estate tax.  Personal representatives for an estate where the decedent passed away in 2011 or later are bound by this tax rate.  Personal representatives for an estate where the decedent passed away in 2010, however, may choose whether to apply the 2010 law or the 2011 law.  This decision is not always as simple as it may seem due to complicated tax basis laws, so personal representatives faced with this choice should consult with an Arizona probate lawyer.