The financial news cycles were dominated by the prospect of the country going over the dreaded “fiscal cliff” as the New Year approached. This abyss, as it were, involved automatic spending cuts and tax increases.
The estate tax would have been increased if no deal was reached to avoid going over this precipice. The maximum rate of the tax would’ve been 55%, and the exclusion would have been just $1 million.
There is an impression out there about the estate tax. Some people view it as something that only the very wealthy have to concern themselves with. However, many individuals would say that $1 million in total assets does not make you a member of the jet set.
This is especially true for ranchers and farmers. Sometimes there is land that has been in the family for generations. In many cases this acreage was purchased when prices were much lower than they are today.
So, you could be in possession of some valuable real estate without really having a great deal of cash on hand.
A lot of people who are owners of farms and ranches would have been impacted by a decrease in the estate tax exclusion down to just $1 million.
As a result of the enactment of the American Taxpayer Relief Act of 2012 we have a $5.25 million exclusion this year rather than a $1 million exclusion, so there is a decent cushion there for farming and ranching families across the country.
It should be noted that this exclusion amount is considered to be permanent with ongoing adjustments for inflation, so we should have at least $5.25 million to work with into the foreseeable future.
Author, President and Founding Attorney
Parman & Easterday
- Does Your Estate Plan Include a Letter of Last Instruction? - June 6, 2023
- What Is the 2023 Gift Tax Exemption? - June 1, 2023
- Incentives Can Be Part of Your Estate Plan - May 30, 2023