The thing to keep in mind when you are considering your potential estate tax exposure is the fact that the estate tax laws seem to be changing all the time. For planning purposes it can certainly be argued that this is not a good thing, even unfair. An individual could pass away during a certain year with a specific estate value and have his or her family members lose a great deal due to the estate tax while the family of another person could die with the same estate value in a different year and have no estate tax liability.
In spite of the fact that the fluctuation of the estate tax parameters clearly results in some inequities, when you’re planning for the future you have to be pragmatic. So, you must identify whether or not your estate is subject to the estate tax on an ongoing basis as changes in the law occur. This is one very good reason to retain the services of an estate planning attorney who recognizes the importance of staying in communication with you throughout the course of your life so adjustments can be made when they become necessary.
At present the estate tax exclusion is $5 million, and the rate of the tax is 35%. However, in 2013 the rate is scheduled to rise to 55% and the exclusion amount is to be reduced to just $1 million. While it is possible that the powers that be in Washington might pass legislation that modifies the law for the better, this may be unlikely under the present political landscape. The federal debt is a pressing matter, and there are those who say that if you are going to cut spending you can’t be decreasing revenue if the debt is indeed such a big problem.
This is a situation that will unfold over the next election cycle and beyond. If you’re not presently in contact with an estate planning attorney, retaining representation is something that you should certainly consider during these rapidly changing times.
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Parman & Easterday