United States of America Federal Estate Duty

In last minute negotiations conducted the around the turn of the year, the United States government finalised and clarified the applications of United States Estate Duties going forward. With effect from the 1st January 2013, any American, citizen or green card holder may leave worldwide assets valued at up to US$5,160,000 in their will without deduction of US federal estate duty, except those who have made substantial gifts during their lifetime, the value of those gifts at the time those gifts were made is deducted from the US$5,160,000 limit.

Any transfers made in excess of this limit will be taxable at 45%. The tax is payable by the estate before the residual amount is distributed.

The limit of US$5,160,000 will automatically increase by the retail price index each year going forward with the revised limit to take effect for any death that occurs on or after the 1st of January in any year.

While this gives clarity to the federal administration of estate duty, the different states may, or may not apply their own version of their estate duty and/or inheritance tax. Where you die in America will give rise to different tax rates.

There is still a place for advanced tax planning to reduce, remove, or make provision for taxes that will be due on death. We will be pleased to advise on request.