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Giving to medicine and health at the University of Minnesota

Transfer taxes and your estate planning

Last December Congress passed legislation that exempts all but a tiny fraction of Americans from gift and estate taxes. But the 2010 tax relief act comes with an expiration date. Under the new law, individuals are able to transfer up to $5 million (or $10 million per married couple) to their heirs free of gift or estate taxes through December 31, 2012. Then, unless Congress acts again, the exemption will revert to $1 million, and the top tax rate will return to 55 percent (vs. 35 percent under the new law).

Now is a good time to review wills and trust arrangements to determine how these recent tax changes may affect you. Be sure to have your attorney review any estate plans linked to the federal estate tax exemption to ensure that future changes won’t disrupt your intended distributions to family and charities such as the Minnesota Medical Foundation.

Federal ‘transfer taxes’

2011–122013
Estate tax exemption$5 million$1 million
Top estate tax rate35 percent55 percent
Gift tax exemption$5 million$1 million
Top gift tax rate35 percent55 percent
GST* tax exemption$5 million$1 million
GST tax rate35 percent55 percent

* Generation-skipping transfer tax

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