The Federal estate tax is considered to be unjust by lots of observers who are familiar with the details. Among their contentions is that the estate tax is an instance of double taxation.
To break it down merely, you pay earnings tax on your earnings. You are then holding the after-tax remainder. If you save or invest a few of this you may build up some resources. These after-tax possessions would enter into your estate. Critics of the estate tax see no logical reason why these funds ought to be taxed once again after you pass away.
Another aspect of the estate tax that is tough to justify is the ever-changing exemption amount. Only people with resources that go beyond the estate tax exemption must pay the tax.
Right now this exemption stands at $5.12 million.
Nevertheless, at the end of this year the tax relief act that was passed back in 2010 is going to end. If this takes place without any brand-new legislation being passed that alters the exclusion it is going down to $1 million in 2013. And, the rate of the tax is rising from 35% to 55%.
So if you pass away on New Year’s Eve this year with $5 million, no estate tax is due. But if you die a second after midnight, $4 countless that will go through a 55% federal levy.
There definitely is a big distinction between $2.2 million and absolutely nothing.
People who criticize the estate tax make some assets, however it is a truth of life however. If you wish to position your assets in a way that supplies estate tax efficiency merely take a moment to arrange for an assessment with a licensed, skilled, and smart estate planning attorney.