When you are a relatively young adult it is likely that you are very much focused on and engaged in the present. Long-term planning and legacy crafting may be the furthest things from your mind. As a result, you may not be aware of the fact that the estate tax even exists.
The reality is that this federal levy lurks in the shadows poised to consume a very significant percentage of your legacy. Right now the estate tax rate is 35%, and if you never thought about the tax before this is a number that should certainly get your attention.
However, the pain does not stop there. Unless there are legislative changes enacted before the New Year is upon us, the top estate tax rate will rise to 55% in 2013. And, the exclusion will be reduced to $1 million; it presently stands at $5.12 million.
Some people call the estate tax the “death tax.” There are those who look at this as a sarcastic jab, but in fact it is literally accurate. The only reason why the tax is imposed is because the individual in question passed away. The resources that are subject to the estate tax were not taxable prior to the death of the taxpayer.
Whether you agree with the idea that death should be a taxable event or not the estate tax is an unfortunate fact of life. You can however take legal steps to reduce or in some cases even eliminate your estate tax liability. To explore them, simply pick up the phone to arrange for a consultation with a good Hartford estate planning lawyer.