Thursday, January 20, 2011

Federal Estate Tax Reinstated - Estates of People Who Die After January 1, 2011

Estate & Tax planning 

My article during July last year - If You're Rich, Watch Out for Greedy Heirs and Sharp Objects - pointed out that we had no U.S. Estate Tax for the one year ending December 31, 2010, and that rich people might consider staying away from greedy heirs. 

watch out for greedy heirs

Then U.S. Congress changed all that hysteria  - The U.S. Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 became law on December 17, 2010.

A controversial part of this tax package is reinstatement of the U.S. estate tax, which had temporarily disappeared in 2010, and it now has higher exemption level and a lower rate than in the past.

After no estate tax for those who died during 2010, beginning January 1, 2011, estates valued at $5 million or less ($10 million or less for married couples) will escape the federal estate tax completely.  However, estates with values above $5 million will be taxed at a 35% rate.

For those who died during the year 2010, estate executors and administrators can use these new regulations or 2010 regulation of no estate tax and no increase in the basis of the inherited properties. 

Beneficiaries of rich people who died during 2010 (with estates larger than $5 million) will have some serious thinking to do about this choice.


This is for information only and not the providing of tax or legal services. You should consult with your income tax professional or certified public accountant about estate tax requirements for your situation.

Harrison K. Long - solutions for real estate and business - REALTOR® and broker associate, Coldwell Banker Residential Brokerage - 949-854-7747 (phone) - (email) - CA DRE 01410855 - SFR short sale and foreclosure resource certified by the National Association of REALTORs®.

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