The Final Year of the Current Estate Tax

As we move into, this marks the second and potentially final year that the estate tax exemption applies only to estates worth more than $5 million, or $10 million for couples, with a tax rate of 35 percent. Since that was a hefty increase from the old exemption of $1 million, or $2 million for couples, many people have put aside their concerns about estate tax issues for the moment. After all, $10 million seems out of reach for most people.

Tax avoidance has long been the primary reason people set up estate plans. After ranking as the Number One reason clients sought out estate planning in 2010, the tax issue dropped to Number Four last year in a survey by WealthCounsel LLC. But the current estate law expires at the end of the year, and tax avoidance could return as a major issue shortly thereafter.

Of course, there are many reasons to set up an estate plan – properly taking care of your family properly, leaving a charitable legacy, ensuring that your assets go as far as possible, etc. But concern about the estate tax has not disappeared. Remember, once the current law expires, there’s no telling where it could go after that. If you have any concerns about bumping up against that estate tax in the future, feel free to give me a call.