Estate Tax

For 2016 the Federal exemption from estate taxes is $5,450,000.

If Congress does not agree by the end of 2012, the estate tax is set to revert to pre-2001 levels. As of this date, estate tax rates for 2013 and beyond are set to increase to a maximum of 55% (up from 35% in 2011 and 2012), and only the first $1 million of one’s estate (down from $5.12 million in 2012 and $5 million in 2011) would be exempt.
In 2011, For an estate or gift(s) with:
Taxable income of $1 but not over $10,000 the tax is $0 plus 18 % over $0
T.I. of $100,000 but not over $150,000 the tax is $23,820 plus 30 % over $100,000
T.I. of $150,000 but not over $250,000 the tax is $38,800 plus 32 % over $150,000
T.I. of $250,000 but not over $500,000 the tax is $70,800 plus 34 % over $250,000
T.I. of $500,000 the tax is $155,800 plus 35 % over $500,000 Any gift tax that you would owe is eliminated or reduced by a tax credit. The credit against taxable gifts for 2011 and 2012 is $1,730,800 effectively exempting $5 million of taxable estates.

Annual Federal Gift Tax Exclusion = $14,000
Lifetime Federal Gift Tax Exclusion = $5,250,000
Lifetime GST Tax Exemption = $5,250,000
Important NOTE is that State exclusions may be different from above Federal amounts.

If Congress does not agree by the end of 2012, the estate tax is set to revert to pre-2001 levels. As of this date, estate tax rates for 2013 and beyond are set to increase to a maximum of 55% (up from 35% in 2011 and 2012), and only the first $1 million of one’s estate (down from $5.12 million in 2012 and $5 million in 2011) would be exempt.
New for 2011 and 2012 is a concept named portability which allows a surviving spouse's estate to use any portion of the exemption amount not used by the other spouse’s estate.
For decedents and gifts made in the current year, a unified credit of $1,730,800 is allowed which is the equivalent of a $5,120,000 dollar exemption is subtracted from the tax calculated on the taxable estate.

Examples of allowed deductions are funeral and administrative expenses, Debts of the decedent, marital deduction, charitable deductions and life insurance payable to an executor or estate. The gross estate minus theses deductions yields the net taxable estate.

The gross estate includes all property in which the decedent had a interest including real property located outside of the US. It also includes Assets at their fair market value at the date of death.
It includes transfers in contemplation of death, transfers with life interest retained, transfers that are not irrevokable. Annuities, property subject to general powers of appointment. Life insurance payable to executor or estate.

For 2013 the Federal exemption from estate taxes is $5,250,000.

Expenses of administering an estate can be deducted either from the gross estate in figuring the Federal Estate tax on Form 706 or from the Estate's gross income in figuring the estate's income tax on Form 1041.
These expenses cannot be claimed for both estate tax and income tax purposes.
Generally, this rule also applies to expenses incurred in the sale of property by an estate that is not considered a dealer.
Administration expenses include the fees paid to the fiduciary for administering the estate. It also includes the accountant, attorney and tax-return preparer fees. Also, expenses incurred for the production or collection of taxable income and expenses incurred for the management, conservation, or maintenance of property held for the production of taxable income.
It also can include any expenses in connection with the determination, collection, or refund of any tax.

Congress has joined the Gift Tax and the Estate Tax together.
If you give more than $14,000 to any person per year ($28,000 with your spouse), you will be subject to the Gift Tax.
If your gift to any person is in excess of $14,000 ($28,000 for married individuals) then you will have to file a Gift Tax return which is generally due April 15 of the year following the gift.
The amount of the gift in excess of $14,000 ($28,000 for married persons) will reduce your lifetime exemption for Estate Taxes by the amount of the excess.