In our last post, we discussed the estate tax and how it is scheduled to come back into existence in 2011, albeit with rates far higher than when we last saw it. In this post, we wanted to discuss a few of the tools that an individual might use to reduce the impact the estate tax may have on his or her surviving family members.
As we have previously discussed, the year of 2010 has been somewhat unusual in that the federal estate tax disappeared completely under legislation that was enacted earlier this decade and was never modified by Congress. While some have wondered if Congress might step in at the last moment and retroactively apply the tax to 2010, the odds of that happening look to be quite slim. However, as we look forward to 2011, we are forced to recognize the return of the federal estate tax.
November is here. In fact, November is half gone. In a week or so, we'll be looking at Thanksgiving festivities. Less than a month after that, we'll be cleaning the house for Christmas guests. With 2010 quickly approaching its close, it's time to ask yourself about estate planning - whether you have a plan, one underway or nothing at all.
When an individual begins considering his or her estate plan, the question of asset protection almost invariably arises. Especially for those individuals with larger estates, small businesses, real estate or other money-generating assets, the return of the estate tax next year is daunting.
When congress left Washington without determining tax rates for 2011, they left a lot of questions unanswered. Not least of all were those concerning the estate tax rate - not just what it would be renewed at, but whether or not it might be retroactively applied.
From a time-based perspective, the soon-to-be-reinstated estate tax is just around the corner. By any other standard of measurement, the details regarding the federal estate tax, its exemptions and demands are anything but clear. At this point, if Congress does nothing, the estate tax will come back on January 1, 2011, allowing for a mere $1 million exemption and charging a 55 percent tax on all assets above that threshold.
As discussed last week, the federal estate tax is not the only tax to consider when planning your estate. New Jersey also levies an estate tax, as well as a tax on certain assets that are passed on after death. This second tax is referred to as an inheritance tax.
The federal estate tax is coming back in 2011; do you know where your money is going? Did you know that New Jersey also levies an estate tax? Much focus has been spent on the currently absent, but pending, federal tax. However, New Jersey has its own tax on assets.
In 2010, the estate tax expired and Congress, marred by indecision and partisan politics, failed to reinstate it. As a result, 2010 was a very lucrative year for some, perhaps most notably, the heirs to George Steinbrenner's fortune. Estimated at more than $1 billion, upwards up $500 million in the Steinbrenner estate was saved from government coffers.