Federal Estate Tax as of December 31, 2013

The Federal Estate Tax is a tax on the transfer of assets from a person who is deceased to a new owner called a “beneficiary.” Exemptions to the tax can lower or eliminate the tax. If a person dies having a total value of assets that is under the exemption amount, zero estate tax is due. Thankfully on January 2, 2013 the American Taxpayer Relief Act was signed into law establishing an exemption of $5 million (based upon a 2011 basis with an adjustment for inflation) per person for U.S. citizens. As a result, currently most middle class families do not need to be concerned with paying the Federal Estate Tax. Unfortunately, this law can always be changed. In fact, the Federal Budget for the fiscal year 2014 called for lowering the estate tax exclusion back to the 2009 level beginning in 2018. We will have to wait to see if this lowering of the exclusion actually occurs.

In addition to the Federal government, many States also impose an estate tax, with the State version called either a death tax, estate tax or an inheritance tax. It’s important to note that Utah does not currently impose an estate tax.

The table below shows a recent history of the Federal Estate Tax Exclusion:
Year Exclusion Amount Tax Rate
2001 $675,000 55%
2002 $1 Million 50%
2003 $1 Million 49%
2004 $1.5 Million 48%
2005 $1.5 Million 47%
2006 $2 Million 46%
2007 $2 Million 45%
2008 $2 Million 45%
2009 $3.5 Million 45%
2010 Repealed 0%
2011 $5 Million 35%
2012 $5.12 Million 35%
2013 $5.25 Million 40%