There’s been quite a bit of speculation about what Congress plans to do with the estate tax.
Under President George Bush’s 10-year tax-cut program, the estate tax has slowly dwindled over the last nine years. And this year, there’s no estate tax at all.
But if Congress doesn’t do something between now and January 1st, the estate tax will return with the same $1 million exemption it had prior to 2001.
In a recent attempt to remedy this problem, Senator Jim DeMint proposed a permanent repeal, which would take the estate tax off the books completely.
Unfortunately, this motion was defeated by a vote of 39 to 59, and so the estate tax debate wages on.
What does that mean for you and your estate?
If you pass away this year, your heirs probably won’t pay any tax but if you die in 2011, anything assets over the $1 million exemption could be taxed at a whopping 55%.
Of course, there are ways to minimize your estate taxes. Property transfers to your spouse for example, are completely exempt, regardless of the amount. In addition, you can give up to $13,000 per year to the same individual without paying estate or gift taxes on the assets.
Life insurance policies that are not owned by you are also not subject to estate tax because they’re not considered part of your estate.
To learn more about minimizing your estate taxes and ensuring your loved ones receive the bulk of you estate, contact our office today.