As of right now, the estate tax exemption is $5 million, with a top marginal rate of 35 percent. That means for most residents in Las Vegas, the estate tax does not apply. But in 2013, the current law will expire, causing the exemption amount to drop to $1 million. The top marginal rate will rise to 55 percent. This large change could scoop up quite a few Las Vegas estate owners and force their heirs to pay estate taxes.
Right now a bill, called the Sensible Tax Act of 2011, is being discussed among politicians, though reportedly it isn’t getting much support. If the bill is passed, it would let the top marginal tax rise to 55 percent, but would index the $1 million exemption for inflation starting in 2000. That means the exemption would drop from the current $5 million for individuals and $10 million for couples to a $1.31 million exemption for individuals and a $2.61 million exemption for couples. The bill was introduced by a Democrat representative from the state of Washington.
Although only 0.13 percent of estates in the United States are work more than $5 million, that percentage doubles for those that own estates worth more than $3.5 million. As the new year nears and 2013 seems to be over the horizon, the estate tax debate will heat up and bring changes that will affect people trying to establish an estate plan. Although the process can be stressful and emotional, it is a very vital and necessary part of planning for the future.
Source: The Seattle Times, ” McDermott tries again to rewrite estate tax,” Kyung M. Song, Dec. 3, 2011