Estate Tax Rules
A $1 million exemption would affect a lot of families who do not consider themselves “wealthy”. “If you have a home, an IRA or 401(k) retirement account, life insurance and some other savings you can get to $1 million pretty easily.
The roots of the estate tax disarray date back to 2001, when Congress voted to gradually raise the estate tax exemption while cutting income tax rates. The phase-out ended in repeal of the tax in 2010. But like the Bush administration’s income tax cuts, the reduction in the estate tax is scheduled to expire at the end of this year.
Historically, wealthy individuals have used a variety of strategies to mitigate estate taxes, including giving away a large portion of their wealth while they’re still alive. But this strategy isn’t practical for families who have most of their wealth tied up in their primary residences and retirement savings.
Estate taxes can be minimized with the use estate planning devices such as marital trusts and for unmarried individuals, irrevocable life insurance trusts.
Contact our office today to discuss your estate planning options to help you minimize the impact of the new tax law.