Estate Tax Now

     The estate tax law currently in effect could expire at the end of the year if Congress does not extend it.  We have not talked about it much here since it went into effect at the beginning of 2011.
     The main thing that was new about it was that, for a married couple, if the first spouse to die does not use up the entire basic exemption of $5 million, he or she can pass the balance of the exemption on to the spouse.
     A person who dies with an estate of less than $5,120,000 is not required to file an estate tax return.  However, if the executor wishes to pass any remainder of the estate tax exemption on to the other spouse, he or she must file an estate tax return even if none would otherwise be required.  And it must be filed by the due date, which is generally nine months after the date of death.
     Some professionals who deal with estates and estate taxes are saying that even for a couple who apparently would never need to file an estate tax return, one should be filed when the first spouse dies just in case the remaining spouse unexpectedly wins the lottery or some such event.  Then the extra exemption would come in handy.
     As noted above, this estate tax law may not survive past the end of this year.  If Congress does not act to extend it, it is scheduled to revert back to an exemption of $1 million and a top tax rate of 55%.  (The top tax rate in is currently 35%.)