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The Kitchen Table

No Inheritance Tax this Year!?

16 years ago

No doubt some of you wise KTers know something about this topic. A death occured in my family last month and I've just learned that 2010 is unusual because there is NO inheritance tax this year. Evidently, it is some ruling left over from the previous administration. Congress was supposed to make a decision by Dec. 2009 on the matter and never did. Has anyone received an inheritance this year--with no tax?? It seems unbelievable!

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Comments (6)

sushipup1
16 years ago
There is a real chance that Congress will fix the problem and make it retroactive for the whole year, so watch out. This is not a simple thing, so don't get your hopes up.

Google the subject and get a host of informative articles. I'm linking to only one article, based on googling "estate taxes 2010".

Was the person who died very wealthy?

Here is a link that might be useful: 2010 estate taxes
lesterd
16 years ago
I absolutely agree with sushipup about this tax going in (so does our accountant), and being made retroactive.

Don't spend all your inheritance too quickly!
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I don't know about the UK but in the USA federal estate tax only kicks in after the first 2 million, goes up to 2.5, in 2008, and increases up to if I remember correctly to 3 million in 2009. In 2010 there is no Federal estate tax. Non, zip, noda. If Congress doesn't do anything it goes back to 1 million in 2011. There is a way to increase the 2 million exemption. For example if a married couple has say 3 million in total assets and one spouse dies the other can disclaim up to one half of the estate and put it into what is called a bypass trust, sometimes called a AB trust, The surviving spouse still has control and can spend it all if they like, with some restrictions, or they can let it grow and it will never have to pay estate taxes. You can also reduce estate tax by using the gift tax option but only up to a point. This is very general information but if you even think your estate is close to the 2 million limit you should consult a really good estate planning attorney. And pay what ever it takes to get informed and hire yourself a CPA who specializes in estates. I know this is possible because this is what my parents did. When my mother passed my dad signed the disclaimer, put her half of there estate in a bypass trust for me, and saved me over a quarter million dollars that I would have had to pay when he passes. Thank you DAD! I still may have to pay estate tax on his half of the estate, hopefully he will live longer that 2010, but like I have told him I would rather have both of the than the money. He being of the depression mentality he would have a heart attack if he even thought I would have to give the government any of his hard earned money.
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Rudebekia
Original Author
16 years ago
Thanks for your responses! Yes, that's what I thought, and the link is helpful. I have no idea what I might inherit (given retroactive taxes, probably very little) but find the confusion right now irritating (on top of settling the estate, a confusing thing in itself). I guess it is a "wait and see."
Nita__AZ
16 years ago
With the state of the economy you can bet the government is going to get every penny they can out of us.
cynic
16 years ago
My dad's estate isn't very big and has been going on for over 2 years. My uncle's estate (in California) is larger but still over a year and a half on that one. A friend's estate was next to nothing and took a couple years. In Minnesota it takes a while to settle estates, especially if an attorney and personal representative want to milk it for all it's worth. However the estate taxes aren't all that much on small estates. A lot depends on your circumstances.
sushipup1
16 years ago
And if you have a trust, it can go very easily. The only thing that held up my Mother's estate was a refund due from her survivor pension from the Army (which took a year), but I had long before paid off the other heirs, except for a small amount. If the estate has real estate that needs to be sold, that can take forever, depending on the real estate market where you are.

Moral to the story: be kind to your heirs and get a trust.

Usually the estate tax is never seen by the heirs, and most estates were not over the two or three million that was exempt. Now, if the heirs split the estate's proceeds and a retroactive tax goes into effect, the heirs will be responsible for their share, if any estate tax is due. Note that this also affects things like step-up values in property.

It's a mess right now!

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