September 8, 2016 will mark the 100th anniversary of the Federal Estate Tax. The Federal Tax taxes your assets when you pass on and they move from one generation to the next. There is no tax under the exemption amount, but once you get above that amount, there is a Federal Estate Tax. In the past, the exemption amount was low, but currently it is a high figure.
In short, it can reduce the amount of inheritance you are able to pass on.
It was originally implemented in 1916 to raise funds during World War I. Some argue that the taxes are needed today because the government continues its high spending but it does not bring in revenues to cover its spending. It is even estimated that 50% of Americans do not pay any form of Income Tax.
Different Views: More or Less?
One political party argues that the Federal Estate Tax should be eliminated and the other major political party argues that the Exemption should be lowered so that more families are subject to the Federal Estate Tax. Even the party that wants more Federal Estate Taxes collected does not answer most people’s concern: That the income and purchasing power of the middle class has been reduced over the past decade. Also there is a wider disparity between the top income producers and those at the lower level. Traditionally America has been a country where with hard work, education, perseverance, and entrepreneurial encouragement one could create a better lifestyle for themselves and their loved ones. That is becoming more difficult with the increasing tax revenues and more government restrictions on free enterprise.
One of my friends says that you believe either that “Big Government” is the answer or that “Free Enterprise” is the answer. We have been moving toward “Big Government” for a number of years.
Future of Federal Estate Tax
The Federal Estate Tax, although less impactful to most Americans at this moment, does not seem likely to disappear. Therefore, it is still something that Estate Planning Attorneys need to take into account when assisting their clients with their Estate Plans to protect themselves, their loved ones and avoid unnecessary taxes and costs.
To Learn More:
Want more information? Visit the IRS website about Estate Tax
At the Law Firm of Steven Andrew Jackson, Attorney and Counsellor at Law, we have helped hundreds of families protect themselves and their loved ones, avoid Estate Taxes and Probate Costs, and keep their Estate Plans current with the law through The Customized Protective Estate Planning Solution™.