Estate Taxes
Most people have heard of estate or death taxes. This is a tax imposed upon your estate when you die if your estate exceeds a certain amount set by the government. This tax is assessed and paid to the government reducing the amount left of the inheritance you intended for your heirs & beneficiaries.
How Much Can I Have?
The federal estate-tax exemption, the amount you can transfer at your death before triggering estate taxation, is a moving target. In the years 2007 and 2008 the amount is $2,000,000. This means that if you die in 2008 and have an estate worth $2,300,000, the $300,000 over the exemption will be taxed at an approximate rate of 50%, so that the government gets $150,000 in estate taxes. In the year 2009, the estate-tax exemption rises to $3,500,000. In the year 2010 it disappears! And one year later, in 2011, it is scheduled to return, at $1,000,000.
Will My Estate Be Taxed?
With the federal exemption in flux you need to evaluate and determine if a Revocable Living Trust could assist you in bypassing federal estate tax.
Can I Think About This Later?
You may choose to make a Will now because you are young, your estate is small, you can’t afford to create a Trust, or you feel you just do not need to worry about estate taxes. If so, please make certain that 20 years from now, when the value of everything you own has probably doubled, that you revisit your net worth and determine if estate taxes are going to be an issue for your family when you’re gone.