All I hear these days from concerned citizens is that the Government is doing nothing. Well, if we continue down this path that nothing is going to be something in the world of estate taxes. If no legislation is passed around the estate tax this year, the likelihood is that it will revert to the original 1 million dollar level with a 55% top estate tax percentage.
Ten years ago, 1 million dollars was a lot more uncommon than it is today. With real estate prices being higher in many parts of the country than a decade ago, it only takes some bank accounts, 401(k)’s, real estate, and some personal furnishings to get an estate above a 1 million dollars. If you had forgotten, life insurance death benefit value that you own is also includible in your estate as well. It may pass income tax free to your heirs, but the death benefit is added in to your overall estate as part of calculating your gross estate.
While George Steinbrenner may have been able to pass his massive fortune to his family this year in 2010 while there is no estate tax, 2011 will bring a massive tax hike to many regular families across America without some new legislation being passed on the estate tax. It is my opinion that Congress may take a look at this before the mid-term elections, but I don’t think you will see the Senate revisit this issue until after the mid-term elections.
With a change of votes in the Senate very possible after the mid-term elections, this could mean gridlock around a final decision regarding an overhaul of new estate tax exemptions and taxation levels. With all of this uncertainty, we are bound to hear of some weird untimely deaths in 2010 of some very wealthy people that are sure to make for an interesting new CSI episode.
You know what isn’t interesting? Giving 55% of your estate to the Government rather than to your family. This is one of those times we sure could use a good GPS system to get us out of gridlock.
Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®
Co-CEO and Founder oXYGen Financial, Inc.
oXYGen Financial, Inc. co-CEO Ted Jenkin is one of the foremost knowledgeable professionals in giving financial advice to the X and Y Generation.
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