Estate Tax

[oftenconfused]

I was at a presentation the other night that centred on the changes to the exemption level for US estate tax that is due to happen on January 1, 2013. This person said that for people with total estates of more than a million dollars, they should be using a US trust for holding their US condo. I've researched this on the web and agree with trying to avoid estate tax but I'm wondering if this estate tax would be ultimately paid when my wife dies (assuming I die first) or does this trust allow my wife and I to avoid the estate tax?

I've also read about avoiding the tax with a non-recourse mortgage. I'm not sure what that it and whether it is a more economical way to deal with the estate tax issue.

[JGCA]

I assume you are a US Citizen asking about US tax, this site deals with international tax not domestic tax questions. For a USC the present exemption is just over $5M per taxpayer ( $ 10M a couple) due to expire on Dec 31 12. In 2013 the exemption is $ 1M per person over that the hi rate is 55%. Since portability now allows you to take advantage of $ 10M in estate exemptions for 2012 in 2013 its only $ 2m trf to a trust will not extend this limit it remains at $ 2M and remember teh GST ( Generations Skipping tax) is not covered by this exemption.

For crossborder taxpayers the limits are prorated according to your world wide assets for USC its a straight limit. But its may be extended like we saw in 2010 no one knows for sure if the limits will change but to be safe figure the exemption will decrease as announced.

[oftenconfused]

No actually I'm a Canadian asking about US estate tax on a condo owned down there.

[JGCA]

Ok just mention your tax status beforehand so the answer would be directed to your situation.