THE LAW OFFICE OF
PAUL MITCHELL
A Limited Liability Company
| Paul Mitchell |
| 3300 South Parker Road, Suite 215 |
Should You Worry About the Estate Tax?
The Federal estate tax has not been renewed by Congress. Before, your estate would not have been taxed unless it exceeded $3,500,000! Right now there is no tax. So, if you’re really rich, dying now would be tax optimal. However, I don’t recommend it!
Colorado does not have an estate or inheritance tax; it has not collected an estate tax since 2005.
Congress may reinstate the tax at the $3.5 million level before the end of the year. So, watch out. If it does not, then in 2011 only $1 million will be protected from estate tax, the same exemption for 2001.
For an estate greater than $1.3 million in 2010, the basis or cost of an asset is the amount that the decedent paid for the property. Imagine a stock bought in 1950. Do you think you could come up with the amount paid for it? The records could be missing or it could take years to find the information. Congress tried this once before and the law was repealed within about six months of enactment.
The gift tax has not been repealed. Net gifts aggregating $1,000,000 are subject to tax. A net gift is the gift exceeding $13,000 per donee. While a donor may not make net gifts of $1,000,000 or more during his or her lifetime, the donor must file a gift tax return even if no tax is due.
