ESTATE TAX UPDATE

At least for the next two years, things could not be much better on the estate tax planning front. On December 17, 2010, President Obama signed the “Tax Relief, Unemployment Insurance Reauthorization and Jobs Creation Act of 2010,” which extends the so-called “Bush Tax Cuts.” The new tax law increases the dollar amount that may pass estate-tax-free to $5,000,000.00 per person ($10,000,000.00 per married couple). This new law will be in place for estates of people who die in 2011 and 2012.

Without this new law, estate taxes were scheduled to be reinstated January 1, 2011, on estates over $1,000,000.00. With the passage of this new law, it is estimated that only 4,000 estates will be required to pay any federal estate taxes at all.

Estate and inheritance taxes may still be imposed by individual states, but the federal estate tax – which could have been as high as 55% – was the most feared by estate planners and individuals. If you are wondering about what states do not have any estate tax, Forbes Magazine published a map that shows each state, what their rates are, and how much may be exempted before the state estate tax is imposed.

White House Press Release highlights other tax benefits of the new law

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