Finally, Finally a Deal on the Estate Tax?
As my recent clients can attest, it has been very hard to plan for estate taxes for the past year. In 2010, there is currently not an estate tax. However, in 2011, the estate tax is set to tax everything over $1 million per person at fairly high rates. Many of my clients have substantial life insurance policies or other assets that put them over that exemption amount.
However, this article from the New York Times indicates that the White House has agreed to a $5 million exemption per person for 2011. Let’s keep our fingers crossed!
Update on the Estate Tax Laws
Written on January 18, 2011 by Sarah White, Attorney at Law
Late last month, a deal was finally signed into law which changed the estate tax laws. The current law was set to expire at the end of the year. In its place a new law was going to take effect, which enabled each person to pass only $1 million of property at his or her death with high tax rates on everything over $1 million. A married couple could pass $2 million only if they did proper planning with trusts in advance.
The new laws are much more favorable. Under the new law, for individuals passing in 2011 or 2012, each estate gets a $5 million exemption. As an added bonus, the exemption between married couples is “portable”, which means that married couples can effectively pass $10 million without any special planning.
That’s the good news. The bad news is that the law is again scheduled to expire at the end of 2012, and what the estate tax laws will be at that time are anyone’s guess.