The federal estate tax system is in a constant
state of change. The following is the current tax structure for the next
few years.
Exclusion Amount: This is the schedule of
the federal estate tax exclusion. This is the amount that your estate can
accumulate before any estate taxes will be owed. This assumes that you
have never made any taxable gifts as gift taxes will reduce these values.
Tax Rate: This is the tax rate that is
assessed on the estate assets in excess of the exclusion amount.
|
Year |
Exclusion Amount |
Tax Rate |
| 2001 |
$675,000 |
55% |
| 2002 |
$1,000,000 |
50% |
| 2003 |
$1,000,000 |
49% |
| 2004 |
$1,500,000 |
48% |
| 2005 |
$1,500,000 |
47% |
| 2006 |
$2,000,000 |
46% |
| 2007 |
$2,000,000 |
45% |
| 2008 |
$2,000,000 |
45% |
| 2009 |
$3,500,000 |
45% |
| 2010 |
Unlimited |
0% |
| 2011 |
$1,000,000 |
55% |
Notice that the exclusion and tax rate return to
the 2001 levels in 2011. This is because the 2001 tax reduction act has a
"sunset" provision wherein it expires after 10 years and reverts to the
old law unless Congress extends it or makes it permanent by enacting
additional legislation.
Strategy
It is recommended that anyone with potential
estate tax liability continue to seek the advice of licensed tax and
estate planning professionals. While there are those that will be
foregoing estate tax planning assuming the end of the estate tax has
arrived, we caution you against this strategy for this reason:
You could be wagering 55% or more of the amount
of your estate above $1,000,000 on the future behavior of 537
not-yet-elected politicians.
House of Representatives = 435
Senate = 100
Vice President (President of the Senate) = 1
President = 1
Total = 537
Important Note
Just because your estate may not accumulate enough
assets to be subject to estate taxation, it does not mean that you do not
have estate planning issues that need to be addressed. There is a
distinction between estate tax planning and estate planning.
We suggest that you consult licensed tax and estate planning professionals
for help with the specific issues in your situation.
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