Sierra Sun: The federal estate tax is levied upon a person’s estate at the time of their death. Currently estates under $5 million are not taxed; estates above $5 million are taxed at a rate of 35 percent. Estate planning now is difficult because we are at a time of real uncertainty about what the future holds for estate tax rates, which may make 2012 a good year to do some gifting if you’re fortunate enough to have a sizable estate.
For 2012, the lifetime gift and estate tax exemption will rise to $5.12 million for singles and $10.24 million for married couples. The gift tax exclusion had been frozen at $1 million for many years, so this could make 2012 an excellent opportunity to distribute assets from an estate free from tax.
Read more estate tax basics.