The estate tax is probably coming back for 2011, but as it stands, it shouldnt affect most people. The current proposal is a 35 percent tax on estates of more than $5 million. Generally, estates are worth much less than this amount. So if you are like most people, the return of the estate tax is nothing for you to worry about.
On the other hand, if you are concerned that your estate might come close to this when you combine investment such as stocks, bonds and property you own, you need to take steps to alleviate the overall tax bill of your estate. Otherwise, the total value of your estate could drop when taxes are applied.
Think about passing property to your heirs before you pass away. This has the same effect of simply giving a gift to someone. The gift passes to your heir without going through the probate court. Giving estate gifts away before you pass away also has the effect of making your bequests perfectly clear. This can save relatives or friends from in-fighting over promised bequests. Your intentions are understood if you give the gift before you pass away.
Also consider setting up trusts in your estate plan to reduce the overall size of your estate. This process requires an attorney to draw up the trust documents and this can be an expensive process, but once your have the trust set up, you pass ownership of the asset to the trust and the asset remains with you until you pass away. If you choose a trust and want to maintain control of the money, set up a revocable trust.
The reestablishment of the estate tax doesnt have to be an expensive tax if you plan ahead and reduce the size of your estate through alternative methods to pass assets to your heirs. Give our office a call today to discuss all your estate planning options.