Newsletter 2010
Newsletter 2010
Estate Tax
Estate Tax
Print Full ArticleLast Reviewed: Jan 2011
Last Modified: Jan 2011
The Jury has spoken on the Federal Estate Tax.
At long last we now know what our federal estate tax system looks like going forward and there are even retroactive changes for deaths in 2010. The 2010 Tax Relief Act created a new, higher $5 million exemption amount with a maximum tax rate of 35%. For deaths in 2010 estates have the option of accepting the new rules with a full step-up in basis or using the rules that were in place for 2010 when the tax was repealed. The rules when the repeal was in place took away the full basis step-up and allowed a limited basis adjustment instead. The Act also adopted "portability" provisions for the exemption amount claimed by both husband and wife. These provisions basically allow both spouses to use their exemption amounts without the need for special wording in their estate planning documents. Oregon's inheritance tax still has a $1 million exemption and Washington's exemption is at $2 million, so the impact estate taxes can have on many families still needs to be addressed from a state tax perspective.
