Will The Estate Tax Ever Go Away

Will the​ Estate Tax Ever Go Away?
The Estate Tax is​ the​ tax that the​ government puts on​ the​ assets that are transferred to​ your beneficiaries when you​ die .​
Taxable assets can include real estate,​ stocks,​ money in​ a​ bank account,​ and other valuable belongings .​
It does not look like the​ estate tax will permanently go away .​
However,​ with careful planning,​ you​ can reduce taxes substantially.
Americans have been planning their estates in​ accordance with the​ Economic Growth and Tax Relief Act since 2001 .​
This Act is​ important because it​ changed 441 tax laws and was the​ biggest estate tax reduction in​ 20 years .​
Here is​ an​ overview of​ what the​ Act covers:
Lower Tax Rate
The Act lowers the​ tax rate on​ the​ following taxes:
1) the​ marginal estate tax; the​ tax levied on​ your estate when you​ die .​
Note: This tax can be a​ burden on​ heirs if​ you​ die and leave behind assets for them,​ but no monetary funds to​ cover the​ tax on​ that asset .​
For example,​ if​ you​ leave behind a​ home,​ the​ government might tax up to​ 55% of​ its value .​
Your heirs will have to​ find a​ way to​ pay those taxes if​ he or​ she wants to​ keep it .​
The Act’s lower tax rate helps to​ decrease the​ amount of​ taxes on​ assets such as​ your home so that your heirs are not overburdened,​ or​ forced to​ quickly sell the​ asset at​ a​ low price so funds to​ pay taxes are available .​
2) the​ generation skipping transfer tax (GST); the​ tax break given to​ you​ if​ you​ are transferring assets to​ a​ grandchild or​ great-grandchild.
3) the​ gift tax; the​ tax levied on​ assets that are given away as​ gifts before you​ die.
Increased Asset Transfers
The Act increases the​ amount of​ assets that can be transferred at​ death without the​ estate or​ generation-skipping tax.
Temporary Tax Repeal
In the​ year 2010,​ the​ generation skipping tax will be repealed .​
This repeal means that grandparents can gift portions of​ their assets directly to​ their grandchildren and great grandchildren without having to​ lose a​ portion of​ those assets to​ taxes.
For the​ year 2010,​ the​ estate tax also will be repealed for one year .​
If you​ die in​ the​ year 2010,​ you​ can give your entire estate to​ your heirs without having to​ worry about paying any taxes .​
However,​ if​ you​ die in​ 2011,​ only $1 million is​ eligible to​ be passed on​ to​ your heirs without being taxed.
Because the​ estate tax will not be permanently repealed within the​ foreseeable future,​ it​ is​ important that you​ plan your estate so that your desires can be carried out in​ the​ most efficient manner,​ regardless of​ the​ year of​ your death.
Understanding the​ complicated tax system can be a​ challenge for someone not versed in​ tax law .​
If you​ are planning your estate protection and distribution,​ we recommend meeting with an​ attorney .​
Your attorney can walk you​ through the​ steps needed to​ ensure that your heirs receive as​ much of​ your assets as​ possible.
Will The Estate Tax Ever Go Away Will The Estate Tax Ever Go Away Reviewed by Henda Yesti on July 07, 2018 Rating: 5

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