Estate tax rate?
Last year, the federal estate tax exemption was $5.12 million per person, with a flat 35 percent tax rate on the amount of the estate that exceeds the exemption. It was as little (relatively speaking) as $1 million just 10 years ago.
The estate planning group at the Scholten Fant law firm in Grand Haven explained what happened with the just-approved tax bill out of Congress in an online newsletter:
"Based on news media reports, the estate tax provisions include a per person estate tax credit amount (exemption) of $5 million. This amount is indexed for inflation. The estate tax rate is a flat 40 percent on the amount of the estate in excess of the exemption."
If the changes had not been made in the estate tax law, beginning this year the exemption would have dropped to $1 million per person and the in-excess tax rate would have been as high as 55 percent!
More good news: According to the Scholten Fant attorneys, the changes in the "fiscal cliff" deal are being characterized as “permanent.” This means there is no expiration date, as has been the case for all estate tax law changes since 2000. Amendment of the estate tax law at a later date remains possible.
By the way, Michigan no longer has an inheritance or estate tax.