On January 1, 2013 the Federal estate tax exemption is scheduled to go down from $5,200,000 to $1,000,000, which means that the death tax, which has only been the a concern for the relatively wealthy will begin to impose a burden on many families, who consider themselves middle class.
This would seem to indicate that these newly affected individuals should be seeking out the services of estate planning attorneys to take advantage of the opportunities to reduce this tax. Unfortunately, the planning process is complicated by the fact that no one knows whether this tax increase is really going to take place or whether Congress at the last minute will restore part or all of the higher exemption.
Unfortunately, ever since 2001 when our lawmakers decided to phase out estate taxes over ten years, we have had to deal with having no permanent answer on what estate taxes will be. The 2001 law called for raising the $1,000,000 exemption to $3,500,000 over a number of years with the estate taxes disappearing in 2010. However, in 2011 the estate tax would resume with the exemption automatically reverting to $1,000,000. Up until the end of 2010 many people expected this would actually take place, but at the end of December Congress provided for a $5,000,000 exemption beginning in 2011. However, once again they provided that the exemption would revert to $1,000,000, this time beginning in 2013, and once again as the day of reckoning approaches we do not know what is going to happen.
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