2015 Estate Tax Exemptions Announced

by Norris Law Group on November 25, 2014

The Wall Street Journal reported on October 30, 2014 that the 2015 Estate Tax exemption has been announced by the Internal Revenue Service. Due to an inflation adjustment, the Estate Tax exemption will rise to $5.43 million for the 2015 tax year, up from the previous exemption of $5.34 million. Married couples may each take the exemption, making the potential exemption for married couples nearly $11 million. These changes mean that only about .12% of estates in America will own estate taxes in 2015. The top tax rate is 40%.

Rules have also been changed so that married couples may not need to use trusts as a vehicle to avoid taxes. These new rules may mean that the lion’s share of wealthy Americans not only may not be liable for estate taxes in 2015, but that they never may have to pay them again.

These changes may also lead to changes in estate planning strategies. For example, in order to avoid estate taxes in the past, wealthy individuals had to forego efforts to try to minimize long-term capital gains taxes, which had a lower top-rate of 15%. But within the bounds of the new rules for 2015, those who don’t owe estate tax may be able to save on capital gains taxes simply by making strategic choices about which assets to hold until death.

Trusts and gift strategies may also need to change, because the new rules mean that estate and inheritance taxes at the state level will likely increase.  Suzanne Shier, chief tax strategist at Northern Trust based in Chicago, says, “The conventional wisdom has been turned on its head because of changes in both the income tax and the estate tax.”

A skilled estate planning attorney can help you devise the best strategies in light of the upcoming changed for 2015.

Attorney Graham Norris and his associates at the Norris Law Group serve the residents of Utah County, UT and throughout Utah, Wyoming and Idaho. Contact them today at 801-932-1238 or online for a free consultation.

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