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Estate Taxes

Estate planning is the process of organizing your financial and personal interests so that your wishes are met with a minimum of inconvenience and expense to your family. Estate planning also can assure that your estate incurs the minimum possible estate tax. The following is some general information regarding estate taxes:

• The federal estate tax is imposed on the transfer of an individual's property at death.
• The decedent's taxable estate equals the value of the total property transferred at death (the "gross estate") reduced by authorized deductions.
• The gross estate can contain property interests of all kinds, including life insurance, jointly owned property, and under certain circumstances, property the decedent gave away before death.
• The estate tax return must be filed within nine months after the date of the death.
• There has been an increase in the amount of property that you can leave your heirs free of estate tax. In 2006, this allowance is $2,000,000, and it will gradually increase to $3.5 million by 2009. The highest marginal tax rate on the remainder of your estate will correspondingly drop from 50% in 2001 to 45% in 2009.
• Due to the Economic Growth and Tax Relief Reconciliation Act of 2001, the future of the estate tax is uncertain. The estate tax is currently subject to complete phaseout in 2010 but a so-called "sunset" provision reinstates the estate tax in 2011.

If you have additional questions concerning the tax implications of a living trust or estate taxes, AllLaw.com recommends that you consult with a licensed tax professional.