Estate Tax: Returning With A Vengeance January 1, 2011


If Congress doesn’t act immediately in the few short weeks remaining in 2010, our nation could have a situation that most people don’t want come January 1, 2011.   In 2009, the estate tax exclusion was $3.5 million ($7 million for couples).  2009’s level affected comparatively few Americans, but that will not be the case with the new estate tax set to return on January 1, 2011.  After a year with no estate tax whatsoever in 2010, in 2011-unless Congress rules to the contrary-the estate tax is set to not only return but to come crashing back larger than ever.

As opposed to 2009’s estate tax exclusion of $3.5 million, 2011’s estate tax exclusion will be $1 million ($2 million for couples). The tax rate will also rise, from 45% in 2009, to 55% in 2011.  This change may prove disastrous for the middle class.

While $1 million may seem like a lot of money, consider this, taken from an article in USA Today, “You take a home, an IRA or 401(k) retirement account, some other savings and you get to $1 million pretty easily,” the article informs, adding, “Families who live in areas with high property values are particularly vulnerable.  People in my neighborhood bought a house for $32,000 in the ’60s, and now it’s worth $1 million.  If they’ve got anything else, they would be paying an estate tax.”

2011’s proposed tax could most hurt ordinary folks: families, small-business owners and farmers.

There are a few strategies that experts suggest to make the most of your money and ensure paying the least in taxes.  Those strategies include taking advantage of gifting laws, setting up a trust, and reviewing your will to ensure it includes language which specifically articulates your wishes, despite what fluctuating estate-tax laws happen to be at the time of death.

Our suggestion: set up an estate plan with us today, so we can ensure your plan is up-to-date and written in a way that protects you, regardless of what happens on January 1, 2011 or beyond.