What is the current status of the federal estate tax for assets passing to non-spouse beneficiaries?
To use a somewhat overused expression, it is “up in the air”.
- The value of assets that can pass, federal estate tax free, to non-spouse beneficiaries increased to $3,500,000.00 on January 1, 2009; transfers between spouses remain tax-free in unlimited amounts.
- In 2010, there is no federal estate tax at all.
- However, in 2011, the value of assets that can pass, federal estate tax free, to non-spouse beneficiaries is reduced to $1,000,000.00; the federal estate tax begins at 45% on the first dollar above $1,000,000.00.
- Most commentators expect the law to change in 2009, but no one knows how it will change; there is a large federal deficit and the federal estate tax is a hot political issue.
- The federal estate tax includes life insurance proceeds, retirement accounts, assets in a revocable trust (living trust) and all other assets owned by a decedent.
- Because of the broad scope of assets included as part of the federal estate tax base, many people are surprised to find that their estate may face a potential federal estate tax obligation.
We would be glad to meet with you to help you prepare an estate plan that avoids or minimizes exposure to the federal estate tax.