We have been urging our clients to have eyes wide open about this for months. People sometimes make sweeping assumptions based on things that they hear. This something to beware when it comes to legal matters in general and estate planning in particular.
Along these lines, there are some who go through life with the impression that the estate tax is only a source of concern for the rich. As a result, they never give the matter a second thought; but if you do this, your heirs may watch a good bit of money go out the window after you pass away.
The reason why some people do not worry about the estate tax it is only levied against people who are wealthy and besides, there is an exclusion. Only the portion of your assets that exceed this exclusion amount are taxable. Right now this figure stands at $5.12 million.
Many people would say that this is not an enormous sum of money but, the fact is, this $5.12 million threshold is not permanent.
This figure is in place due to provisions contained within the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. This act is going to sunset at the end of this year. Under current laws, the estate tax exclusion will be reduced to $1 million at that time.
Clearly, this is going to affect a lot of people – considering the fact that there are over 10 million households in the United States with assets exceeding $1 million according to CNN Money. Actually there is more when you include life insurance. If you are one of them, or close to it, you would do well to sit down and discuss your situation with a licensed, experienced Oklahoma City estate planning lawyer.
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Parman & Easterday