How Will Your Estate or Trust Administration Be
Affected By This New Surtax?
The Affordable Care Act has been upheld by The Supreme Court.
This has confirmed that trusts and estates will in fact be subject
to the additional 3.8% Medicare Surtax in 2013. This particular
act has been put into place to try and help reform and finance
healthcare. The 3.8% surtax will be applied to certain types of
investment income. For example, dividends, taxable interests,
capital gains, annuities, royalties, and rental income. Therefore,
if your net investment income exceeds the threshold for the
highest bracket (which is $12,000) the Medicare surtax will be
applied. It is important to remember that this Medicare surtax is
an addition to the federal and state tax that an estate must
This raises issues for executors and trustees about whether or
not they should distribute income to tax payers
(who might be at a lower rate). This can be a complicated question
so to avoid personal liability, an executor or trustee should get
legal advice ( about what the trust permits) AND tax
advice (about key saving strategies).
For more information regarding the tax changes in 2013,
please contact David M. Frees, III at [email protected]
or call 888-573-7407.