Estate Planning
AT DEATH - Unless modified by Congress in the next 4 months, the federal estate tax will be repealed as of 1/01/2010, i.e., there will be no federal estate tax levied on the estates of all 2010 decedents. Current law increases the maximum amount a decedent may pass onto his/her heirs estate tax free from $3.5 million for a 2009 death to an unlimited amount for 2010 deaths, then reduces the exemption to $1 million for 2011 deaths. NOTE: it’s important to know the difference between estate taxes and inheritance taxes. Estate taxes are generally levied by the Internal Revenue on estates, including life insurance owned by the deceased individual, that exceed a certain level called the “estate tax exemption” – and, the tax rate is very high – upwards of 50%. Inheritance taxes are generally levied by the state where the deceased resided prior to death and are normally a much lower percentage that the federal estate tax. Inheritance taxes generally have a much lower of exemption.
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