What are my Federal Estate Tax obligations?
Estate taxes may be due from the estate of the last to die of a husband and wife, or from the estate of an unmarried individual. There is a 100% tax exemption for bequests between spouses, but when the surviving spouse then dies, a higher, “graduated” tax may be owed on the entire estate if planning is not done before the first spouse dies. The estate of each individual, whether married or unmarried, is allowed a lifetime unified gift and estate tax credit or “exemption.” While the Federal gift tax exemption will remain at $1,000,000.00, the unified gift tax exemption on the value of the individual’s estate on the year of death is as follows: – 2001 – 2003 $1,000,000.00 – 2004 – 2005 $1,500,000.00 – 2006 – 2008 $2,000,000.00 – 2009 $3,500,000.00 – 2010 Unlimited – 2011 $1,000,000.00 The effect of Massachusetts estate taxes on an estate were effectively reduced to $0 for most estates in 1996 because the state instituted a “sponge” tax that creates a federal estate tax credit for any est
