An interesting set of circumstances is simmering as the election season heats up, and it will affect people who are planning ahead for the future.
Currently the estate tax exclusion is $5.12 million and the maximum rate is 35%. We have these figures in place because of provisions in the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.
This tax relief act is going to expire at the end of this year. As we all know, there’s going to be an election toward the end of this year as well.
When this tax relief act expires the exclusion is scheduled to be reduced to $1 million while the maximum rate rises to 55%.
Taxes are always a subject of debate during elections, and the estate tax will certainly enter into the discussion. It is possible that the rules could be altered through some new legislation, and this will be something to keep an eye on as the year progresses.
A 55% federal tax on anything that you try to leave to loved ones that exceeds $1 million is certainly something to take seriously. Some suggest that a levy on resources that you have left over after paying taxes all of your life that takes more than it leaves is a bit excessive.
Given these pending changes action may be required during this calendar year. To discuss tax-efficient strategies with an expert, take action right now to set up an informative consultation with a licensed Northern KY estate planning lawyer.