Changes in Federal Tax Law Benefits Most Estates
In December 2010, Congress passed new tax legislation which raised the amount people can leave as inheritance and the amount people can give during a lifetime without paying Federal estate and gift taxes. The new exemption amount is $5 million dollars.
In the past, a person could only exempt the first $3.5 million dollars before estate tax would be applied, and only $1 million dollars before the gift tax would be applied. The change in the law means that less than on-half of one percent of the estates in 2011 will pay an estate tax. That estimate comes from the chairman of the American Bar Association, Alan Rothschild. In past years, roughly 10 percent of estates paid the estate tax.
The Federal Estate Tax Benefits May Not Last
The current tax legislation is set to expire in just two years at the end of 2013. Congress may decide to continue the legislation, or it may reinstate lower exemption levels in order to collect more taxes from estates. Planning now while the benefits exist may allow people to give more to their loved ones and less to the government.
Experienced estate planning attorney Elga Goodman can help you take an inventory of all your assets and make a plan that takes advantage of the current tax legislation and plans for possible changes in the future. Call us today at 973-841-5111.