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Estate Taxes

Written by: Daniel B. Purtell

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Posted over 2 years ago. 0 helpful votes, 0 comments

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What is the Estate Tax?

There are two types of death taxes that you should be concerned about: federal estate taxes and state estate taxes. The federal estate tax is computed as a percentage of your net estate. Your net taxable estate is comprised of all assets you own or control minus certain deductions. Such deductions can be for charitable donations as well as an “applicable exclusion amount”. The applicable exclusion amount varies from year to year: In the year 2009, it is set at $3,500,000 per year, which means that you may pass on up to that amount in those years without being subject to any federal estate tax. The federal estate tax is “repealed” for the year 2010, but the repeal “sunsets” on December 31, 2010 and the applicable exclusion amount goes back to $1,000,000 for 2011 and onward.

Will my estate be affected by an Estate Tax?

Even if you believe that that you may not be affected by the federal estate tax, you still need to determine whether you may be subject to state estate taxes and whether you will have a taxable estate in the future as your assets appreciate in value. You should regularly review your estate plan with an experienced estate planning attorney to make adjustments to reflect changes in the tax laws as well as shifts in your individual circumstances.