Federal Estate Taxes

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Federal Estate Taxes

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	The Tax-Free Piggy Bank
	Each of us has a federal estate tax exemption that allows us to shelter a portion of our assets from federal estate taxes. Think of this exemption as a piggy bank that we can fill up with assets at our death to give estate-tax-free to our heirs. Thanks to The Economic Growth and Tax Relief Reconciliation Act of 2001, the exemption amount jumped to $1 million in 2001 and increases over the next seven years until the estate tax is repealed in 2010. There is no guarantee that the tax breaks in the new tax law will last, since the law is set to expire in 2011. Most likely, Congress will vote to extend or make permanent many of the tax changes that are contained in the new law. Between husband and wife, the IRS allows unlimited tax free transfer of assets at death. In addition, you can leave an unlimited amount to charity and escape the Federal Inheritance Tax.
	Estate & Gift Tax Rates and Unified Credit Exemption Amount
	Year	Top Estate & Gift Tax Rate	Estate & GST Exemption Amount
	2002	50%	$1 million
	2003	49%	$1 million
	2004	48%	$1.5 million
	2005	47%	$1.5 million
	2006	46%	$2 million
	2007	45%	$2 million
	2008	45%	$2 million
	2009	45%	$3.5 million
	2010	repealed	N/A
	2011	55%	$1 million

	This information is not designed, meant, nor does it constitute the rendering of legal advice. You should consult with an attorney and tax advisors before implementing any strategy discussed here.


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