December 17, 2010
Finally, some clarity! To the relief of many estate planners, financial planners and concerned citizens across the United States, the controversial tax compromise has successfully passed through Congress and is now headed to the President’s desk to be signed into law.
This comes after an entire year of uncertainty as professionals and taxpayers alike were losing hope that Congress would act before the pre-2001 tax rates reverted back into law at the beginning of the year.
Of course while there are still a number of people unhappy with this 11th hour deal ( including the President himself), it’s still a better solution than tax hikes across the board and an estate tax that was bound to affect even the middle class.
So what did Congress ultimately pass with regards to the estate tax?
As of now, the law permits someone to pass $5 Million of their assets (or $10 Million per couple) tax free to their beneficiaries upon death. For anything else above that, the tax rate is set at 35%.
That’s a far cry from the $1 Million exemption and 55% tax rate that would have taken affect on January 1st had Congress done nothing.
You may now be wondering what this all means as it relates to your Sacramento estate plan. Fortunately, for the majority of my clients, the revival of the estate tax means nothing and will NOT have an impact on their plans.
Not today at least.
I say that because many people forget this tax compromise is only is only temporary and slated to stay in effect for two years. Yet things could change sooner, as the Democrats are already vowing to amend this portion of law as early as next year.
But yes, as of today, you can rest easy knowing your estate is protected from the dreaded inheritance tax. However, you should still keep this issue on your radar as it is subject to change at any time.
For people who haven’t followed this closely or simply don’t understand the ever changing tax laws, I would say this is one of the major benefits of working with me as your Sacramento estate planning lawyer. I keep things like this on MY radar at all times so you don’t have to. If something comes up in Congress that appears to affect your estate plan, I will notify you promptly and we’ll also talk about how to protect your estate from unnecessary taxes during your complimentary 3 year review.
Not already a client but want the peace of mind knowing someone is watching over your estate plan to make sure it stays updated as your life and the law changes through the years?
Give us a call at (916) 241-9661 and set up a Peace of Mind Planning Session. These sessions are normally $750, but you can come in free with the mention of this article. However, this offer is limited to 10 sessions per month so call today!