Sunday, January 6th, 2013

Living Trust and Estate planning after the fiscal cliff deal.

I read an interesting article today that I think nicely summarizes the new tax laws with respect to estate planning and estate taxes.

See link from Forbes magazine:

Few of my living trust and estate planning clients care about estate taxes because their estates are small.  Estate or “Death” taxes are federal taxes on your estate which your beneficiaries pay if your estate is over five million dollars at your death.  Not such a terrible problem to have.

However, the tax was going to change from five million to any amount over one million dollars – if you were unfortunate enough to pass away in 2013.  At one million dollars, many of my clients would have estates subject to estate tax.  Especially when you consider that life insurance proceeds are included in that calculation.

Well congress passed some new laws, like they do, and we are still at the five million dollar level for individuals and ten million dollars for a married couple.

The tax, for those who must pay it, did go up to 40%.  So a six million dollar estate would not pay tax on the first five million, but would pay 40% on the one million that it’s over or $400,000!

Mark J. Lamb

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