represents clients in business and personal transactions including advising and forming business entities and estate planning. He is certified by the State Bar of California as a specialist in estate planning, trust and probate law and taxation. Mr. Nahigian is also a certified public accountant. 499 West Shaw Avenue, Suite 116 Fresno, California 93704 559.248.4820 Phone 559.248.4830 Fax www.ch-law.com enahigian@ch-law.com should be reviewed and revised because of The American Taxpayer Relief Act of 2012 (the "Act"). The Act, enacted on January 1, 2013, to avert the so-called "fiscal cliff," contains a number of significant estate and gift tax provisions including: of $5,000,000 indexed annually for inflation. For decedents dying after December 31, 2012, the exclusion amount, as adjusted for inflation, is $5,250,000 per individual. "portability" between spouses. Portability essentially allows the unused estate tax exclusion of a deceased spouse to be used by the surviving spouse. estate and gift tax rate on the estate in excess of the exclusion amount of $5,250,000. a husband and wife involved a trust that was created during the couple's lifetime. Upon the death of the first spouse, the trust was either divided into two trusts (an A Trust and a B Trust) or divided into three trusts (an A Trust, and a B Trust, and a QTIP Trust). In a typical AB Trust plan, on the death of the first spouse, the deceased's share of the estate, but not more than the exclusion amount, would be held in an irrevocable trust (often referred to as the "exemption trust" or the "bypass trust") for the benefit of the surviving spouse, and the rest of the estate would continue to be held in a revocable trust for the benefit of the surviving spouse. In a typical AB Trust plan, there was no estate tax due on the death of the first spouse, and the amount held in the exemption trust was not subject to estate taxes on the death of the surviving spouse. The surviving spouse's share of the estate that was held in the revocable trust for the benefit of the the "A Trust" or the "Survivor's Trust") would be subject to estate tax and an estate tax would be due if the value of the survivor's estate exceeded the estate tax exclusion in effect on the death of the surviving spouse. As a result of the Act and the $5,250,000 estate tax exclusion and portability, most couples will not need to use an exemption trust to prevent an estate tax from being imposed. A couple with a combined estate of not more than $10,500,000 can retain the deceased's share of the estate in a revocable trust, elect portability on the death of the first spouse, and leave their entire estate to their children estate tax free on the death of the surviving spouse without using an exemption trust if the entire estate does not exceed $10,500,000 on the death of the surviving spouse. An estate tax return on the death of the first spouse is required to elect portability. Revised as a Result of the Fiscal Cliff |