Pay attention to the House of Representatives this week! It appears our government is getting ready to decide how to change the current federal estate tax laws over the next couple of weeks.
Will the House of Representatives recommend the 2009 $3.5 million federal estate tax exemption allowance become the permanent allowance starting in the year 2010? Or, will something different be recommended?
If the existing $3.5 million exemption becomes a permanent estate tax allowance, a married couple could use an A/B trust and pass $7.5 million to their heirs free of federal estate tax. Very few estates would be subject to any federal estate tax.
It may become more important to watch what the estate tax laws are in a particular state..and figure out what state not to die in. As the amount of the federal estate exemption allowance has grown from $1 million to $3.5 million over the last several years, some states have not have changed their inheritance or state estate tax laws. For some, the choice of residence may impact the amount of estate taxes due when someone dies.
A recent New York Times article listed 12 states that have some type of estate tax/inheritance tax. http://online.wsj.com/article/SB125694593227919879.html
I know someone who experienced the costly impact of New Jersey state inheritance tax laws. I’ve heard her say time and time again…”DON’T HAVE YOU PARENTS DIE IN NEW JERSEY!!!”
Stay tuned. We’ll be watching what is happening in Congress.. and keep you up to date on the latest developments.