Will the Bush-era tax lawsexpire after December 31, 2012? To expire or not to expire, that is thequestion.
When it comes to the â€œdefaultâ€2013 estate tax, some 12.5% of U.S. households may come under the estate taxaxe, according to new analysis by LIMRA. These numbers were picked up andreported by LifeHealthPRO andreported in its article titled, â€œLIMRA: More than 1 in 8 U.S. households mayowe estate tax in 2013.â€
This change in the estate taxexemption limit scoops up a huge new group of taxpayers in its dragnet who otherwisemight not have been subject to the estate tax axe. In fact, many in this newgroup of estate tax taxpayers have not previously found themselves at the topof the wealth pyramid. So, how is this possible?
If (or when) we fall off thefiscal cliff, the IRS will be forced to apply 12-year-old laws, and with them a12-year-old estate tax exemption and its estate tax rates. In other words, theestate tax exemption will revert to $1 million from the current $5.2 million,and a 55% maximum estate tax rate will replace the current 35% rate. Yes, thatâ€™sa quite a low blow.
Remember, itâ€™s not just yourbank account that the IRS counts against your estate tax exemption, but all ofyour assets, to include your home and life insurance death benefits.
Unfortunately, thatâ€™s just thetip of the tax iceberg. Not only is it absolutely vital to keep track of thelaw, but it is essential that you know the steps to take now to protectyourself and your loved ones in the event Congress and the White House fail toact.
This is an excellent time to schedule a year-endreview with Idaho Estate Planning. We want to ensure your estate planwill be able to survive a tumble off the tax cliff. Remember, good planning is no accident.