Is The Estate Tax Repealed - Myths And Realities Of Estate Planning
Taxes are something you have to pay all of your life, and if you do not plan ahead, they will be something your estates will be paying even after you are gone. So making sure that you get quality estate planning tax advice when you are arranging your final affairs is one way to ensure that your heirs, and not the IRS, receive the bulk of your estate.
The Economic Growth and Tax Reconciliation Relief Act of 2001 (EGTRRA) threw many individuals for a loop when it came to estate plannings. Tax laws are never simple but EGTRRA added a level of confusion rarely seen in advanced planning. For instance, between now and 2011 the federal estate tax is scheduled to decrease, disappear and then spring back to life. According to a Wall Street Journal article dated May 11, 2005, the "...current estate tax law puts estate-tax planners in an impossible situation...". With such uncertainty, some potentially damaging estate planning myths have surfaced. These financial "urban legends" stand in the way of prudent estate planning. We will address some of the most prevalent and most common estate planning myths so we can be better informed. Myth. The Federal Estate Tax was repealed.
Your beneficiaries are those individuals who will inherit your estate when you die. It is important that you carefully consider and name your beneficiaries. Choose the appropriate individuals for the estate you will be leaving behind. Many times, beneficiaries are children and spouses. However, if you have young children, you may not feel comfortable setting up your estate so that they inherit a large sum of money directly. How will they spend it? Are you sure that they would make wise choices? If you would like to have more control over the estate after you die, then it is important that you set up a Trust for your beneficiaries. By establishing a Trust, you can allocate a certain portion of your estate towards a child's education, first home, or other purpose of your choosing. Consult with a qualified attorney for more information about how to set up your estate for your beneficiaries.
Permanent repeal of the federal estate tax requires an affirmative vote of 60 Senators. This is not an easy task. After all, repealing the federal estate would eliminate a significant source of federal revenue. Just how much revenue would the repeal of the federal estate tax eliminate? The cost of repeal through 2015 (including the current rates and exemption amounts) is estimated at $290 billion (according to the Joint Tax Committee, a bipartisan group). Other sources have estimated that the cost would be even higher. In addition to the cost of repeal, the federal government has been hit with several large budget items including Hurricane Katrina, the Iraq war and a growing deficit. Additionally, the election cycle always plays a role. Faced with these significant budgetary items, repeal of the estate tax appears to be less likely.
If you do follow the advice of an estate planning tax professional, make sure that you keep copies of all the estate planning documents. They will be essential in case you have the bad luck to deal with an unqualified party, and your heirs need to prove a claim of negligence.
Because life events, such as divorce, loss of job, etc., may change your assets, it is important to periodically revisit your plan to ensure that it is always current. Many people die without reviewing their assets, so their plans cannot be carried out as they had desired. By regularly reviewing your plan, you are able to help your beneficiaries inherit the assets you leave behind for them without having to fight for them in court or with other beneficiaries.
The Economic Growth and Tax Reconciliation Relief Act of 2001 (EGTRRA) threw many individuals for a loop when it came to estate plannings. Tax laws are never simple but EGTRRA added a level of confusion rarely seen in advanced planning. For instance, between now and 2011 the federal estate tax is scheduled to decrease, disappear and then spring back to life. According to a Wall Street Journal article dated May 11, 2005, the "...current estate tax law puts estate-tax planners in an impossible situation...". With such uncertainty, some potentially damaging estate planning myths have surfaced. These financial "urban legends" stand in the way of prudent estate planning. We will address some of the most prevalent and most common estate planning myths so we can be better informed. Myth. The Federal Estate Tax was repealed.
Your beneficiaries are those individuals who will inherit your estate when you die. It is important that you carefully consider and name your beneficiaries. Choose the appropriate individuals for the estate you will be leaving behind. Many times, beneficiaries are children and spouses. However, if you have young children, you may not feel comfortable setting up your estate so that they inherit a large sum of money directly. How will they spend it? Are you sure that they would make wise choices? If you would like to have more control over the estate after you die, then it is important that you set up a Trust for your beneficiaries. By establishing a Trust, you can allocate a certain portion of your estate towards a child's education, first home, or other purpose of your choosing. Consult with a qualified attorney for more information about how to set up your estate for your beneficiaries.
Permanent repeal of the federal estate tax requires an affirmative vote of 60 Senators. This is not an easy task. After all, repealing the federal estate would eliminate a significant source of federal revenue. Just how much revenue would the repeal of the federal estate tax eliminate? The cost of repeal through 2015 (including the current rates and exemption amounts) is estimated at $290 billion (according to the Joint Tax Committee, a bipartisan group). Other sources have estimated that the cost would be even higher. In addition to the cost of repeal, the federal government has been hit with several large budget items including Hurricane Katrina, the Iraq war and a growing deficit. Additionally, the election cycle always plays a role. Faced with these significant budgetary items, repeal of the estate tax appears to be less likely.
If you do follow the advice of an estate planning tax professional, make sure that you keep copies of all the estate planning documents. They will be essential in case you have the bad luck to deal with an unqualified party, and your heirs need to prove a claim of negligence.
Because life events, such as divorce, loss of job, etc., may change your assets, it is important to periodically revisit your plan to ensure that it is always current. Many people die without reviewing their assets, so their plans cannot be carried out as they had desired. By regularly reviewing your plan, you are able to help your beneficiaries inherit the assets you leave behind for them without having to fight for them in court or with other beneficiaries.
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New Unique Article!
Title: Is The Estate Tax Repealed - Myths And Realities Of Estate Planning
Author: Frank Miller
Email: fmiller714@yahoo.com
Keywords: Boomer Planning,Boomers,business,Estate Plan Trusts,Estate planning,Finance,financial planning,Legacy Planning,retirement,retirement planning
Word Count: 626
Category: Finance
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