U.S. Federal Estate, Gift and Generation-Skipping Transfer Tax Rates / 143
• The Canada–U.S. Treaty increases the credit for residents of Canada from the $14,000
allowed under U.S. law up to the amount of the credit allowed to U.S. citizens. However,
the credit must be prorated by the ratio of the FMV of the individual’s U.S. situs assets
over the worldwide estate.
• In 2014, a generation-skipping transfer tax of 40% will apply in addition to any estate or gift
tax payable on certain transfers to individuals or trusts that are more than one generation
below the transferor. Each U.S. individual will be entitled to a lifetime exemption for
generation-skipping transfers of $5,340,000, but an election may be required on a gift or
estate tax return to provide the intended utilization of the exemption.
• The following table summarizes both the exemption amounts and the highest tax rates
for estate and gift taxes, for the years 2012 to 2014. For 2012 and subsequent years, the
‘estate exempt amount’ is indexed for inflation.
Estate
Lifetime Gift Highest Estate and
Exempt Amount Exempt Amount
Gift Tax Rate
2012
$5,120,000
$5,120,000
35%
2013 5,250,000
5,250,000
40
2014 and
5,340,000
5,340,000
40
subsequent years
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