News & Updates

Congress “Fixes” Estate Tax Rules…..For Two Years

Late in 2010, as part of a larger tax bill, Congress amended the estate tax rules and rates, so after years of uncertainty about these rules we now have some certainty, at least for two years.

Briefly, to provide some context, an individual who died in 2009 could leave an estate of $3,500,000, with no federal estate tax due. There was no estate tax due at all for decedents who died in 2010. Now, for 2011 and 2012, an individual can die with a $5,000,000 estate, with no federal estate tax, and the federal estate tax rate kicks in at 35%. It is important to note that state estate tax is likely to be due; check with your advisor for details about your own situation. If Congress takes no further action on the estate tax rules, in 2013 the federal estate tax will apply to estates of more than $1,000,000.

While the rules now provide certainty (and significant relief) for decedents dying this year and next year, of course in real life things are not that simple, since at this point it is impossible to tell what Congress might do about the estate tax rules for years after that. This poses difficult planning problems for anyone, particularly for landowners with important family lands. Landowners need to take an active role in working with experienced tax advisors, to see to it that to the extent possible their assets pass to their heirs in the way the family wants. See the three Preserving Family Lands books for more details.