What is the Estate Tax?
According to the IRS, the federal estate tax is a tax on your right to transfer property when you pass away. The amount your gross estate had to total before the estate tax was triggered up until recently was less than one million dollars, so many Americans who had worked their whole lives to accumulate some wealth would instantly lose much of it when they pass away and are unable to transfer it to their children.
Fortunately, in 2012, the unified lifetime gift and estate tax exemption was increased to five million dollars and the tax rate continues to be at forty percent. The exemption number has also been adjusted for inflation for the coming years after 2012. So, unless you and your spouse have a gross estate of over $11,000,000 when you both pass away, at this point in time, estate tax is no longer a grave concern.
However, because of these and other legislative changes, your estate plan that was completed years ago might need some major revisions, and without them, your beneficiaries could be severely limited. With the right legal guidance from your estate planning attorney, you can avoid or minimize federal estate taxes and adjust your estate plan to current legislation, allowing you to leave more assets to your loved ones and other beneficiaries after your death.