Estate Planning Strategy

GIMME A TAX BREAK

ESTATE PLANNING STRATEGY CALLED
FOR LIVING UNTIL 2006

Those of us who have been in the financial and estate planning area for a long time have learned to depend on a long life as part of the solution to a good estate plan. I remember back in 1981 when President Reagan was in office the strategy was to live until 1986 because the estate tax exemption was increased from $60,000 to $600,000 in annual increases. Obviously, if anyone owns a home in any part of the country, they would be subject to estate taxes under those ancient exemption levels.

President Bush endorsed the current levels of estate tax exemption, which were just increased as of January 1, 2006 to $2,000,000 for each taxpayer. They are scheduled to remain at that level until 2009 at which time they will jump to $ 3,500,000 for one year and then if you are lucky enough to die in 2010 there is no estate taxes. HOWEVER, if you are not lucky enough to die in 2010 but due so in 2011 or later, the estate tax exemption is scheduled to return to the $1,000,000 level.

So the good news is you made it to 2006. Will it be bad news to live until 2011 rather than die in 2010? I hope NOT. I hope my readers live to a ripe old age and enjoy everyday of their life.

However, I don’t think it is smart to sit on the side lines when it comes to estate tax planning. Remember, estate taxes, in my opinion, are an elective tax you elect to pay, because with adequate time and proper planning you can eliminate estate taxes.

1/12/2006