The time is nigh! No, no, no…. not time to die yet.
But it is just about time for that fun political war over “death taxes”Actually, there’s really no such thing as a “death tax” Usually what is meant by “death tax” is actually estate or inheritance taxes.
Estate tax is an amount that a deceased person’s estate is taxed based on the net value of that estate.
We’ve been enjoying a very high exemption from Federal estate taxes over the past several years, peaking this year at $5,120,000 (that’s right, five MILLION, one hundred twenty thousand). So if your estate was worth less than that amount, you needn’t worry about paying Federal EstateTax. Virginia matched that exemption. The top tax rate for estates valued above the $5.120M exemption is 35%
I don’t have many….uh, any…. clients who have an estate that even approaches that value. But I would welcome you if you if you want to call!
Anyway, that’s all about to change as we roll to the edge of the “Fiscal Cliff” at the end of the year. Yes, the ‘death tax’ exemption is one of those that will sunset on December 31st 2012.
So then what happens? (if congress does nothing) Very simple: we revert to the tax rates/exemptions that were in place in 2001/02. And THAT exemption is a mere $1 million. But the top rate for taxable estates skyrockets back to 55%.
Most of my clients have estates valued at well under 1 million dollars. So their death and taxes concerns are pretty minimal.
If your estate plan was done during the period that these changes have been made, and you calculate that your assets – home, investments, cash, automobiles, antiques, art, guns etc. etc. might be greater than $1M, you may want to have a new look at your estate plan. Indeed, you should (generally speaking) revisit your estate plan every 5 years or so.
Want to learn more about Wills and Trusts? Come to the FREE “More on Wills & Trusts” program at the Charlottesville Senior Center on Tuesday, November 20, 10-11 a.m. All ages welcome and open to the public. Charlottesville Senior Center is located at the corner of Greenbrier and Pepsi Place.
