As of January 1, 2010, the estate tax went away for a year.
This can have a significant impact on a larger estate; since traditionally the “death tax” as many have come to call the estate tax, can eat up nearly half of a wealthy person’s estate. People that fall into that category may include those with “family owned business” and small farms.
The one year break from estate tax does not mean that no taxes will be paid. Instead, there will be a complex tax on capital gains. This will have a greater affect on more taxpayers.
Unless Congress makes changes, the estate tax is due to come back in 2011 with a lower exemption ($1 million) and a higher tax rate (up to 55%).
Uncle Sam will look at the whole estate, including any insurance proceeds, whether payable to the estate or not, in determining the size of a person’s taxable estate. So even if you may not have much more than a home, vehicles, a few stocks and bonds, and a retirement account, if you have life insurance, you may very easily exceed the exemption amount.
If you may have a taxable estate and would like a no-cost review to see if tax planning would be beneficial, please give us a call or email to set up an appointment.