2009 Federal Estate Tax Changes Focus Attention on State Estate May Also Face State Estate Taxes

August 18, 2008 Advisory

Federal Estate Tax Changes. Each U.S. citizen and permanent U.S. resident is entitled to an "applicable exclusion amount" that exempts up to a certain amount of an estate from the federal estate tax. For 2008, the applicable exclusion amount is $2 million. Up to $1 million of an individual's applicable exclusion amount may be used during life to shield taxable gifts from gift taxes. Up to $2 million, minus the amount used during life for taxable gifts, may be used to shield estate assets from the federal estate tax. On January 1, 2009, the applicable exclusion amount will increase to $3.5 million for federal estate tax purposes. The amount available to use for gift taxes will remain at $1 million.