A brief history of estate taxes in the 1990’s through 2000’s. Between 1990 and 2011, the federal estate tax exemption (the amount of assets you could pass through inheritance without paying estate tax) varied between $600,000 and $5M. The amount of tax you would pay if your estate valued more than the exemption also varied between 35% and 55%. For every dollar you had that was over the exemption rate, you would pay something between 35 cents to 55 cents in taxes. And, to top it off the exemption and the tax level changed in ‘97, ‘98, ‘99, 2000, ‘02, ‘03, ‘04, ‘05, ‘06, ‘07, ‘09, ‘10, and ‘11. Every year listed came with a different tax exemption level and a different tax rate that would be imposed for exceeding that year’s exemption.
A topic that is typically covered during a meeting with me concerns estate taxes and whether or not you currently have to worry about them. I say currently, because as I explained above, change can and will probably happen.
Thankfully, we have been operating under an era of comfort and predictability since 2011. An Act passed by Congress and signed by the President created a baseline estate tax of $5M, to be adjusted each year for inflation, and a tax rate of 35% for every dollar above the exemption. Since 2011, that previous exemption amount of $5M has increased, due to inflation, to $5.48M in 2016. And, for married couples with a properly prepared Revocable Living Trust or a Revocable Family Trust, they can pass twice that much without paying estate taxes.
Idaho has no gift tax, no inheritance tax, and its estate tax expired in 2004. From - Idaho State Tax Commission’s Website.
Although estate taxes aren’t something us common folk have to worry about, there are numerous other reasons to start working on your estate plan, including; guardians for minor children, blended families, powers of attorney, avoiding probate, planning for families with special needs, real property held in multiple states, and setting up future distribution for minor children. Contact Jeppesen Law, PLLC today to start your plan. 208-477-1785.
Disclaimer - Jeppesen Law, PLLC do not provide tax or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax or accounting advice. You should consult your own tax and accounting advisors before engaging in any transaction.