The war on the federal estate tax rages on as President Obama on December 17 signed the Tax Relief Act of 2010. The federal estate tax was repealed for the entire 2010 tax year but because of this Act will be applied back to January 1, 2010.
What does this mean for you, your Will or Trust? It means this new federal estate tax, which will be in effect for 2010,2011,2012 tax years, has the largest federal estate tax exemption at $5,000,00 and the lowest federal estate tax rates at 35%.
Unfortunately there is still uncertainty as to what will happen in 2013 and beyond. As of now in 2013 the federal estate tax will revert back to 2002 rates of a %1,000,000 exemption and 55% tax rate. There is no consensus on what will happen to the federal estate tax. Some in Washington believe this Act is the catalyst for a permanent estate tax repeal while others believe this was merely a sell out by President Obama and the war is not over.
The war it seems is not over on estate taxes but as of now for 2010,2011, and 2012 we have the largest federal estate tax exemption ever and the lowest federal estate tax rates. This is valuable information for the drafting, amending, or reviewing of your will and trust. Make sure you utilize this new law in your estate planning strategy.