New Year, New Tax Rates- Is Your Estate Protected?

Though it was a long, often contentious time coming, Congress did finally approve a bill to reduce what everyone dubbed the “fiscal cliff:” the U.S. budget deficit. Taxes will be raised for high income earners. While many individuals and families were concerned by the expected drop in estate tax exemption from $5.12 million to $1 million, the $5.12 million exemption has stayed and will continue to be graduated for inflation.

Other items of note: There was an estate tax increase, from 35 percent to 40 percent; the estate tax rate exemption is $5.12 million per individual. Also, dividends and capital gains are now taxed at 23.8 percent, the combination of a new 20 percent capital gains tax and a 3.8 percent surtax from the Affordable Care Act. However, that surtax only applies to individuals making over $200,000, and to married couples filing jointly with incomes of more than $250,000.

The income tax was increased for high-income households, for individuals who earn $400,000 annually, and for married couples who earn $450,000 annually together. Social Security had a tax increase, as well; the payroll tax cut which expired with 2012 was not extended; those taxes will rise 2 percent.

The start of 2013 and new tax rates means you should review your current estate plan with a Hook Law Center estate planning attorney to ensure your assets are protected.

The elder law attorneys at Hook Law Center assist Virginia families with will preparation, trust & estate administration, guardianships and conservatorships, long-term care planning, special needs planning, veterans benefits, and more. To learn more, visit https://api.hooklaw.net/ or call 757-399-7506.