There are always those who are calling for an estate tax repeal, and over recent years there have been bills introduced on Capitol Hill that would indeed repeal the tax.
Why would anyone think that an estate tax repeal makes sense?
We all must pay taxes on our income. We are then left with a remainder. No one suggests that there should be some type of additional tax imposed on any principal that you placed in the bank after you paid your taxes.
However, your after-tax savings are indeed subject to the estate tax if they exceed a certain amount. Many people simply do not see the fairness in this. They say it is an exercise in double taxation.
Another thing that some individuals find hard to understand is the rate of the estate tax if it must in fact exist. This year the maximum rate of the estate tax is 40%. Critics of the tax feel that a federal levy that is poised to consume four dollars out of every 10 that you are passing along to your loved ones is more than a little bit excessive.
And finally, there is the argument that the estate tax is selectively imposed. If the tax is necessary and fair, why should some people be required to pay the tax while others are not based on a rather arbitrarily selected exemption amount?
Regardless of how you feel about the inherent fairness of this tax it is something that is indeed in place. The good news is that legal steps can be taken to mitigate your estate tax exposure.
If you are interested in learning about tax efficiency strategies that may be available to you contact our firm for a free estate planning consultation.
Duffy Law Office is a member of the American Academy of Estate Planning Attorneys.