The federal estate tax stands on shaky logical ground in the minds of many individuals. For one thing, they contend that the estate tax is an instance of double taxation. When you earn money you must pay income and payroll or self-employment taxes. You are then left with an after-tax remainder. The purchases that you make are made with these after-tax earnings, and any savings that you accumulate would consist of money that you had left over after paying taxes.
The personal possessions that you buy with your after-tax earnings are not taxable by the virtue of their very existence. Your savings can sit in the bank safely without being taxed while you are still alive. So by what logic can the government tax these resources once again after you pass away? It was the event of your death that was apparently taxable, and this is why some people call the estate tax the “death tax.”
The rate of the estate tax would seem to be excessive even if you somehow accept it as logically supportable. Right now the maximum estate tax rate is 35%, and this is certainly quite significant. But as the laws currently stand the top rate of the estate tax is going up to 55% at the end of 2012 when the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 expires. Is it fair to take more of the taxable portion of a person’s estate than you allow his or her family to keep?
Fortunately, there are steps that can be taken to mitigate your estate tax exposure. If you would like to sit down and discuss the matter with a professional, simply take a moment to pick up the phone and arrange for a consultation with an experienced estate planning attorney.
Roy W. Litherland has offices in Campbell, California, and can be reached at (408) 356-9200 or (831) 476-2400.
- Litherland, Kennedy & Associates is Walking in the 2022 Walk to End Alzheimer’s. Join Us! - August 29, 2022
- Establishing Health Care Documents for Young Adults – A Mock Interview (VIDEO) - August 27, 2022
- How Do I Title Thee…Part 1 - August 17, 2022