Are There Any Exemptions to the Estate Tax?

There are exemptions to the estate tax. The federal estate tax exemption for 2014 is $5,340,000 and that pertains to each American citizen; therefore, between yourself and your spouse you have over $10,000,000 in exemption. In addition to that, there is a skip generation benefit equal in value which means that you can not only pass down to your spouse and to children, but also down to future generations by use of the skip generation with it.

© 2014 Parsonage Vandenack Williams LLC

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Nebraska to Authorize Transfer on Death Deeds

Owners of real property will soon be able execute and record a “Transfer on Death” deed enabling an owner to pass property to one or more beneficiaries at the owner’s death without probate or transferring the property to a trust.  In addition to the standard deed requirements, a Transfer on Death deed must (1) state that the transfer occurs on the owner’s death, (2) contain certain statutory warnings, and (3) be properly recorded during the owner’s lifetime.  Until the death of the owner, beneficiaries have no interest in the property solely by being named a beneficiary.  Transfer on Death deeds can be revoked by disposing of the land, recording a revocatory instrument, or recording a subsequent Transfer on Death deed naming a different beneficiary.  LB 536 becomes operative on January 1, 2013.

Keep in mind that trusts may still be a more effective method of transferring property as trust can provide for contingencies such as what should happen to property when a beneficiary predeceases you or is incompetent.  Trusts have other advantages over transfer on death deeds as well but the new law is a welcome improvement for many situations.

© 2012 Parsonage Vandenack Williams LLC

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IRS Provides Relief for Estates that Failed to Elect Portability

Due to lack of early information and guidance by the IRS regarding the portability election and how it is made, the IRS has granted relief to some estates that failed to file an estate tax return or extension thereof in a timely manner. In Notice 2012-21, the IRS has granted the executor of a “qualifying estate” that failed to timely request an extension to file an estate tax return the opportunity to obtain a six-month extension of time until 15 months after the decedent’s date of death. A “qualifying estate” is an estate in which (i) the decedent is survived by a spouse, (ii) the decedent’s date of death is after December 31, 2010 and before July 1, 2011, and (iii) the fair market value of the decedent’s gross estate does not exceed $5,000,000. In order to utilize the relief granted, an executor must file a Form 4768 with the IRS office designated in the instructions to the form within 15 months of the decedent’s date of death. In addition, the executor must enter at the top of the Form 4768 the notation “Notice 2012-21, Extension for Good Cause Shown” or otherwise sufficiently notify the IRS that the extension is being filed pursuant to Notice 2012-12.

Notice 2012-21 can be found at: .

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