Some people who are potentially exposed to the estate tax would not consider themselves to be “wealthy.” They earn a decent living as farmers, but they are certainly not living the lifestyles of the rich and famous.
Many farmers own large pieces of land that have been in the family for generations. Over time it has appreciated considerably, and its value may exceed the estate tax exclusion amount.
This concern weighed heavily on the minds of many farmers as 2013 approached. Without new tax relief legislation, the estate tax exclusion was scheduled to be reduced to just $1 million in 2013. In 2012 it was $5.12 million.
That is quite a significant difference, and the maximum rate of the tax was scheduled to rise from the 35% that was in place in 2012 to 55%.
Farm families received some good news when the American Taxpayer Relief Act of 2012 was passed.
The president had mentioned a figure of $3.5 million as a compromise with regard to the estate tax exclusion. Many people in the estate planning field felt as though this may be where the estate tax exclusion would land in 2013.
Fortunately for people who own valuable farmland, the base estate tax exclusion of $5 million remained in place after the passage of this act, with ongoing adjustments for inflation. As a result we have an exclusion of $5.25 million in 2013 which is actually bigger than it was in 2012.
This may be a relief for many, but you never know what the future holds. Always keep in touch with your estate planning attorney so that you can make adjustments if and when they become necessary as laws change in the future.