You may have heard that the estate tax exclusion was raised to $5 million with a maximum tax rate of 35% as a result of the passage of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.
Response To Estate Tax: Educational Gifts You may have heard that the estate tax exclusion was raised to $5 million with a maximum tax rate of 35% as a result of the passage of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. This could potentially lead you into a false sense of security, thinking that you are not exposed to the estate tax because your estate is not worth this much. Before you get too comfortable you may want to recognize the fact that the present estate tax parameters are not permanent. This tax act that was passed at the end of last year is scheduled to expire at the end of 2012. If it does sunset without any new legislation being passed to replace it, the maximum estate tax rate is going to go up to 55% and the exclusion is going to be reduced to just $1 million. So in reality, if it would appear as though you're going to live beyond the end of next year and your estate is worth more than $1 million it is indeed exposed to a federal death levy poised to take more than half of that taxable portion. One appropriate response would be to take steps to reduce the overall taxable value of your estate. Gifting is probably going to be your first thought, but there is a gift tax in place and its rate mirrors that of the estate tax. However there are some gift tax exemptions that can be utilized and one of these allows for making educational gifts. Each taxpayer may pick up the tuition costs of any number of gift recipients without incurring any gift tax liability. Considering the high cost of education these gifts can whittle down the value of your estate considerably. Simultaneous to achieving this goal you would also be offering some of your loved ones an opportunity to gain an educational foundation that will serve them in good stead for the rest of their lives. Experienced estate planning attorneys Oklahoma City OK of the Parman and Easterday offers estate planning and business planning resources to residents of Oklahoma City OK. To learn more about these free resources, please visit www.parmanlaw.com/ today.
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