Wednesday, February 01, 2006

Baby Boomers and estate taxes

For we baby boomers who are concerned about our estates, the matter of the Federal Government repealing the estate tax has led to some prognostication; however, many believe that Congress will just freeze the UNIFIED CREDIT EQUIVELENT at some set amount. The amount of exemption has been steadily increasing over the years: In 2002 it was $1mm; In 2004 it was $1.5mm and beginning this year it is $2mm. In 2009 it is projected to be $3.5mm. What this means is the first $2,000,000 of your estate at death is not subject to Federal estate taxes. Anything over $2,000,000 is taxable.

Also, since 1981 the ANNUAL GIFT TAX EXCLUSION remained at $10,000. In 2002 it was increased to $11,000 and for 2006 the annual gift tax exclusion has increased from $12,000. This is a good way of gifting portions of your property to your children. You can do this in conjunction with establishing a Trust. You must remember to have a professional appraisal done every two years.


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