On behalf of Robert C. Adamski, Attorney at Law
The Federal Estate Tax was phased out for the year 2010, but was scheduled to come back with a vengeance in 2011 with an exclusion of a mere $1 million.
Fortunately, Congress has passed a bill granting a $5 million exclusion for 2011 and 2012, and the highest tax rate is 35%, a significant reduction from previous rates. The bill will go to the President on Friday. This is a drastic change from previous law.
What does this mean to you? A single person dying in 2011 or 2012 need not pay estate tax if their total taxable estate is less than $5 million. A married couple can double the exemption to $10 million with proper planning.
Dying in 2011 or 2012 means that most estates will not be subject to estate tax. However, the estate tax exemption, sometimes called a “death tax” by opponents of the tax, rises and falls with the mood of Congress and the President. The election of 2012 will undoubtedly put the $5 million exemption in play for the politicians. So, my advice is to breathe easy for now about the estate tax but to be certain your estate planning documents provide for possible drastic changes in the future.
Check out Bob’s Inheritance Blog for up to date information!