2012 Estate Tax Numbers

by Roger A. McEowen

The IRS has released estate tax data for deaths in 2012.  The IRS data can be accessed here. For deaths in 2012 (when the applicable exclusion was $5.12 million) the total amount of federal estate tax paid was $8,492,115,000. That means that the average federal estate tax burden for a decedent’s estate in 2012 was approximately $3,400.00 (there were approximately 2.5 million deaths in 2012).  9,400 estate tax returns were filed for 2012 deaths, representing approximately four tenths of one percent of all decedents’ estates.  Compared to 2011, estate tax return filings almost doubled in 2012 and the amount of the estate tax paid increased over 70 percent.  Compared to 2003, the number of filings is down significantly, due to the increase in the applicable exclusion.  As a source of revenue for the federal government, the federal estate tax raised approximately 0.42 percent of federal tax collected in fiscal year 2012.  That’s a small percentage amount, but the 2012 number was 31 percent higher than the number for fiscal year 2011. 

Relatedly, various studies show that the compliance costs associated with estate planning exceed the revenue generated by the tax.  See, e.g., Aaron & Munnell, Reassessing the Role for Wealth Transfer Taxes, 45 National Tax Journal 119 (June 1992).  By estate size, real estate made up the smallest proportion of total assets for decedent’s estate in the $20 million-and-up category (13 percent).  It made up the highest proportion for estates under $5 million (25 percent).  Real estate made up approximately 21 percent of the total composition of assets for estates in the $5 million to $10 million range.  That last number, in particular, points out that the federal estate tax is of particular concern to farm and ranch estates and other small businesses. The IRS statistics also reveal that the primary asset likely to be included in a generation-skipping (“dynasty”) trust, is stock rather than agricultural land.