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Federal estate tax in 2012 for taxable estates more than $5.12 million with 35 percent flat tax rate

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The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 was signed into law on Dec. 17, 2010.

The act reinstated estate and generation-skipping transfer taxes. For decedents dying in 2012 the first $5.12 million of value is exempt from estate taxation with the excess taxed at 35 percent.

The act added a new provision for married couples. If both spouses die during 2012, then in most cases the surviving spouse’s estate can claim the $5.12 million exemption plus any portion of the exemption not used when the first spouse died in 2011 or 2012. So if both spouses die in 2011 and 2012, a maximum of $10.24 million can pass estate tax free.

The generation-skipping transfer tax exemption (generally the amount of present value that a taxpayer can pass to heirs more than a generation younger than the taxpayer) also increased to $5.12 million for 2012.

This is a good time to review your estate-planning documents with your professional adviser to be sure that your current estate plan reflects the law for 2012 and after. Most of us have felt the desire to make a difference, to give back to something that has changed our lives for the better. At the same time we are concerned with providing for our loved ones after we’re gone. What if you could do both?

We can show you how. You can reduce or eliminate gift, estate, and generation-skipping taxes by including The University of Texas at Austin in your estate planning. Instead of the money going to the IRS it can make a difference at the university. With thoughtful planning, charitable gifts will not reduce the amount your heirs will receive and in some cases can increase the amount of an inheritance.

Doing Well While Doing Good: Estate Planning and Smart Giving to UT Austin provides information about the many ways testamentary charitable gifts can be structured.

Gift Planning
Phone: 512-475-9632
Toll-free: 866-488-3927
Fax: 512-471-3439

IRS Circular 230 Notice: The University of Texas at Austin does not provide legal, tax, or financial advice. Consequently we urge you to seek the advice of your own legal, tax, or financial professionals in connection with gift and planning matters. This information is not intended to be used and cannot be used for the purpose of avoiding tax-related penalties.