Estate Tax in 2011

As you know, there was no estate tax and generation skipping taxes (GST) in 2010.

Estate Tax in 2011

Right now, the estate tax is scheduled to revert back to the former law prior to the 2001 Tax Reconciliation Act. This means that the federal estate tax exemption will be $1 million per person.

The estate tax rate in 2011 will be 55% on any amount over the estate tax exemption. Of course, it is still possible that there will be a reinstatement of the Bush tax cuts and the exclusion will be $3.5 million with a 45% estate tax rate on any amount over that.

Estate Tax Will Be Higher

While we still don’t know what the estate tax exemption and the estate tax rate will be for sure, the one thing that we can be reasonably certain of is that the cost of transferring wealth will be higher.

Time to Reassess Your Estate Planning

If you haven’t done so earlier in the year, you still have time to reassess your estate planning before the end of the year. If you are married and you have a trust that establishes a credit shelter trust which is based upon the maximum amount to create the minimum estate tax, it is very important to review your trust and your wills to avoid problems and undesirable results for you and your heirs. The changes in the tax laws can have significant adverse consequences if you have no idea how the changes affect your current set of estate planning documents.