Estate Planning Attorney



 

The Federal Estate Tax Through 2011


The federal estate tax rates and exemptions are set by Congress, and the rates and exemption limits have been changed for the period from 2004 - 2009. The changes enacted by Congress have resulted in a decrease of the tax rate and an increase in the maximum allowable exemption. The 2007-2008 estate tax exemption is $2,000,000, and is set to expire completely, with no estate taxes whatsoever being imposed on anyone who dies in the calendar year 2010. On January 1, 2011, however, the federal estate tax will be reinstated with a $1,000,000 exemption.

Federal Estate Tax

The United States Estate Tax is frequently referred to as a "death tax" since its provisions take effect only after someone dies. At that time, all the assets owned by the person are subject to the tax, and the value of the estate is based on their value at the time of death. All assets held by the deceased, including real property, bank accounts, vehicles, stocks and bonds, life insurance, annuities, employee benefits, and more, are considered to be taxable assets at the time of death.

Assets that are passed to a surviving spouse are exempt from the federal estate tax as long as the person receiving them is a United States citizen. If the surviving spouse is not a citizen, taxes may still be avoided by passing the assets to a special type of trust. Estate taxes may also be reduced or avoided by leaving assets to a qualified charity, and all liabilities are subtracted from the total of the estate's assets so only the person's net worth is subject to the estate tax. This taxable amount of the estate is thus arrived at by taking the gross total of assets owned by the person who died and subtracting charitable donations and liabilities. THE MAMOLA LAW FIRM, APC is conveniently located throughout Orange County. For additional information, please contact us at (949) 333-6543.




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