Understanding where you are in relationship to the existing estate tax parameters is one of the first things you are going to want to ascertain when you are planning your estate. At the present time, the estate tax exclusion stands at $5 million and the maximum rate of the tax is 35%.
So if your estate is worth less than $5 million the entirety of it could be passed on to your loved ones free of taxation. Anything that exceeds $5 million would be taxed at 35%.
The above parameters came about due to provisions contained within the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. At the end of 2012 this tax relief measure is going to sunset. Under current laws the estate tax exclusion will then be reduced to $1 million and the top rate of the tax will go up to 55%.
There are some 8,000,000+ households in the United States who have assets that exceed $1 million, so these pending changes will impact a lot of Americans.
A tax that will consume 55% of the taxable portion of your estate is certainly a force to be reckoned with. This is where intelligent estate planning comes in.
There are a number of different strategies that can be implemented to reduce or eliminate your estate tax liability. The optimal plan is going to vary on a case-by-case basis depending on the nature of your assets and exactly what it is that you would like to achieve with your legacy. If you are interested in devising a plan that provides you with estate tax efficiency, don’t hesitate to pick up the phone and get in touch with an experienced Orange Park FL estate planning lawyer.