There are a large number of tax changes this year, as well
as every year prior to this year. But, the estate taxes
have been due for an overhaul for several years now. The
estate tax laws affect many people who do not make plans
to optimize their estate tax planning, because they are
not aware of the need. This is primarily due to the lack
of proper knowledge, of their actual estate size. Analyze
your estate, so that you will know if estate tax laws affect
you. The following article will outline this year's highlights
of current estate tax laws.
Tax Relief Reconciliation Act of 2001
Estate Tax Highlights
>The estate tax is repealed in
2010.
Do not get excited just yet. The new bill repeals the estate
tax for one year, and allows the CURRENT estate tax rules
and rates to come back into existence in 2011.
>The top rate of 55% is immediately
dropped to 50% in 2002, and eventually to 45% by 2009.
> The current $675,000 individual exemption is raised to $1.0
million in 2002, $1.5 million in 2004, $2.0 million in 2006,
and $3.5 million in 2009.
Upon the repeal of the estate tax, the step-up in cost basis
is partially lost.
Proper planning will be required to deal with cost basis
issues.
> Beginning in 2002, each person will have $1.0 million lifetime
gift tax exclusion.
Gifts in excess of $1.0 million will be subject to a tax
equal to the top income tax rate applicable.
Lois Center-Shabazz is the founder
of MsFinancialSavvy.com and author of the 3-time award-winning
personal finance book, Let's Get Financial Savvy! ISBN #0971979502.
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