What is the status of the estate tax currently?

As of January 1, 2010, the Federal estate tax has been repealed -- but only for one year. As part of the 2001 tax act, Congress increased the amount persons could give away tax-free at death (the "Exemption Amount"),. This amount increased each year over a 10 year period. The Exemption Amount reached $3,500,000 in 2009 and ultimately became unlimited this year. In other words, the Exemption Amount in 2010 is equal to the value of your entire estate.

However, tax law changes were limited to a 10 year duration. Thus, in 2011, the estate tax will be reinstated with an Exemption Amount of only $1,000,000 and a rate of tax equal to 55%, the same exemption and tax rate as in 2000. Larger estates will also have an extra 5% tax that was repealed 2001, but be reinstated in 2011.

If you have questions about how the estate tax affects you specifically or if you need a Texas estate planning lawyer, contact Peterson Law Group.