Calculating the tax burden on your estate is frequently confusing due to ever-changing tax standards.
The U.S. Congress has created a dilemma and quite a bit of uncertainty by repealing the federal estate tax and generation-skipping tax for those who pass away in 2010. In 2010, the federal estate tax has been repealed and replaced with a carryover basis. The estates of those passing away in 2010, therefore, are exempt from federal estate tax and federal generation skipping tax. However, the exemption isn’t as wonderful as many thought it would be because there is no step-up in basis, and therefore some heirs face a huge burden on overall taxes.
In 2011, the federal estate tax is scheduled to return, at a rate last seen in 2001: the first $1 million of your estate will be exempt and the remainder will be taxed on a scale of a 41-55% tax. A married couple has the benefit of an unlimited marital deduction, regardless of whether the assets changed hands during the lifetime or at death. The marital deduction allows the surviving spouse to delay paying estate taxes on the assets he or she received from the deceased spouse until his or her own death.
In 2010, the annual gift tax exclusion remains $13,000; this was last increased in 2009 from what was then a $12,000 exclusion.
Oregon has its own tax on inheritance. In 2010, it is 9.6-16% on amounts over $1 million, and in 2011 it will be 5.6-16% on amounts over $1 million. This tax was passed and implemented in 2003. All wills drafted and executed before that time did not properly anticipate or consider this tax implication and should be reviewed to see if they need revision.
At Stahancyk, Kent & Hook, P.C., we will counsel you in how to protect your assets to ensure that your beneficiaries receive distributions as you intended and give you peace of mind that your wishes will be carried out during your lifetime and beyond. Click here for new client information.
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