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Estate Tax Surprise For Next Year

A large difficulty in advising clients regarding their estate planning has been the uncertainty in Federal tax laws.  This uncertainty has resulted from the tension between the political parties in Washington over tax policy.

Some years ago, as a part of a series of reforms of tax policy, the estate tax exemption was incrementally raised up to 3.5 million in 2009, and estate tax completely eliminated for 2010.  This meant that for several years, people with significant assets had a lot of margin for their estate tax planning.  Those of us in the estate planning practice have been expecting Congress to deal with the fact that the legislation expired in 2011, returning the tax exemption to only one million dollars; however, years have passed without Congress addressing this.

So baring some action in the “lame-duck” session of Congress, beginning in 2011, the estate tax exemption will return to one million dollars.  What does this mean for you?  This means that if the total amount of money and assets that could potentially pass to your heirs upon your death is close to that amount, you need to consider the state of your estate planning immediately.  The fact that you are not “worth” more than one million today does not mean that the estate tax ( at anywhere from 41% to 55% on amounts exceeding the exemption ) will not affect your heirs, especially if there are significant other assets that might be added to your estate such as life insurance.

Contact us for a no-obligation consultation.  This is not an issue you want to put off.

Posted in Elder Law.