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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