Obama Plans to Keep the Estate Tax

There has been much debate in the estate planning community as to what President-Elect Obama planned to do with the Federal Estate Tax, otherwise known as the death tax.  As a Michigan estate planning lawyer, I help our clients plan for the Federal Estate Tax.

The current tax exempts estates smaller than $3.5 million.  In 2010, there is an unlimited exemption.  However, as it currently stands, come 2011, anything over $1 million that is passed to non-spouses will be taxed at 55%.

According to a recent Wall Street Journal article, President-Elect Obama plans to lock in the current $3.5 million exemption and tax anything over that amount at 45%.  For example, if you have an estate (including business interests, house, life insurance, etc) totaling $4.5 million, you will be paying $450,000 in taxes under his plan if you do not do any estate planning to minimize the tax hit.

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