As the end of the calendar year draws near, there is more and more speculation about when Congress might take action to address the federal estate tax. Today the Wisconsin Law Journal ran an article on the federal estate tax. Laws on the books call for the tax to end in 2010, and then resume in 2011 at $1 million. That means, in 2011 if an estate was valued at $1 million or more, the federal estate tax would apply. The current exemption level is $3.5 million, meaning estates below $3.5 are exempt from the federal tax.
What does this mean for you? Well, if you are a farmer or small business owner it makes estate planning a bit tricky....we're not certain what the new exemption level will be. There are several bills floating around DC, and the prevailing thought is the higher the exemption level, the better.
Why is the estate tax so troublesome? Well, it applies on liquid and illiquid assets. Horror stories about of small business owners or farmers dying, leaving behind an estate worth more than the exemption, but little cash to pay the IRS...often leading to a fire sale to generate cash quickly.
As the year ticks to an end, keep your eyes on Washington for movement on this issue.
Wednesday, November 11, 2009
Musing about the Federal Estate Tax
Melinda Gustafson Gervasi is a Madison attorney and author whose current practice focuses on estate planning and probate. She is committed to increasing the public’s understanding of estate planning and probate issues. In 2013 she released her first book, Middle Class Philanthropist where she illustrates how anyone can leave a legacy. Gustafson Gervasi Law Office, LLC, 5555 Odana Rd., Suite 205, Madison, WI 53719
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1 comment:
I have heard if you die in 2010 there's no estate tax, but you do not get the step up in cost basis that usually occurs when you die.
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