You have to be very concerned about the looming specter of the estate tax when you are positioning assets with the future well-being of your loved ones in mind. Contrary to popular belief, the estate tax is not just reserved for the very wealthy, and more people will be exposed to the tax in 2013.
At the end of this year, the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 is going to expire. When it does, under currently existing laws the estate tax exclusion goes down to just $1 million. And, the rate of the tax goes up from the 35% that we have now to a rather shocking 55%.
Yes, that’s right. The tax man is poised to consume more than half of anything you want to leave to your loved ones that is in excess of $1 million when 2013 rolls around.
If you combine everything that you own, including life insurance policies, it can add up in a hurry. With this in mind, you may want to arrange for a life insurance trust for your insurance policies. In this way, the trust owns the assets and they are not going to be considered part of your estate for estate tax purposes.
Insurance can play a big role in many estate plans, but you have to consider the tax implications. To learn more about the estate tax and how to mitigate your exposure to this rather harsh federal levy, take action right now to arrange for an informative consultation with a licensed and experienced San Jose estate planning lawyer.