I would never have believed two years ago that it would be possible for us to be going back to a 1 million federal estate limit. But, in spite of many legislative bills and resolutions it appears to be helping.
How did we get here? Under the 2001, Bush tax cuts, the amount exempt from estate taxes went up gradually over 8 years then took a big jump to $3.5mil in 2009. In 2010, both the federal estate tax and 2010 the federal estate tax was eliminated for one year only.
After the Bush tax cut expired at the end of 2010, the estate tax is scheduled to return in 2011. At the same unfavorable rights applied ten years earlier, before the Bush tax cuts. In 2011 the amount that is exempt for federal estate tax will be $1mil and the tax on the rest will be 55% as a base, and go as high as 60% and this tax is imposed on all of your assets including your life insurance, IRAs and fair market value of all of your real-estate including farms.
It is true that money that goes to a spouse is exempt from federal estate tax. But be careful, leaving money to a spouse only serves to double your estate, resulting in even more taxes being collected when the second spouse dies.
Most of those outside Congress in Washington, assumed that some type of political deal will be struck before the estate tax disappears in 2010 and comes roaring back in 2011. That has not been the case in spite of much grumblings and proposals.
Many of my clients have told me, “I never thought that I would be here facing a catastrophic estate tax, where between state and federal taxes, up to 70% of my estate could be lost to taxes.”
There are things that can be done. We suggest that you come in and visit us and we’ll provide suggestions as to what you can do to reduce this estate tax from falling on you.
We would suggest that you come in before you face the devastating effect of losing your money to this tax.
