Estate Taxes Have Been Repealed But...Home
The estate tax law allowed for a deduction of $1,000,000 and the balance of your estate is taxed at the rate of 55%. This law has been repealed which has resulted in some people living under the assumption that they no longer need the life insurance policy that would be used to pay the amount assessed at death any more. If they consulted their tax attorney or a knowledgeable accountant or life insurance agent they would realize that this assumption is far from the truth... What the law actually does is to gradually reduce the percentage of estate taxes you would be required to pay by 10% by the year 2009 if your estate is at the top level...from 55% to 45%. It also increases the amount of your estate exempt from these taxes to 3.5 million dollars by the year 2010. In 2010 there will be no estate taxes but the law will revert to what it was originally by 2011... If you therefore should die in any year other than 2010, and you have a large estate, Federal Taxes will be assessed and will be required to be paid. Bear in mind that the Government does not wait for it's money so a life insurance policy is still needed to pay this bill. Life insurance is the most cost effective way to pay amounts due. During the years when less money will be assessed by the Federal Government a higher Capital Gains tax will be taken from the heirs as the law stands at the present time. In other words these people will immediately be thrown into a higher tax bracket than they were in before. Furthermore, many people are not aware that some States have an estate tax law. There goes another portion of your estate...though the amount is usually smaller than the Federal Tax.
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