A recent news report highlighted some upcoming changes to the estate tax that may affect those who make a living in agriculture. However, the changes may be of interest to any resident of Texas and elsewhere. Indeed, those changes could be of keen interest to people who are currently contemplating the estate planning process.
Even those people who are young and healthy should consider estate planning. For farming families, the failure to plan adequately for one’s death could result in the necessity of selling the farm just to pay the estate taxes, as well as risking conversion of the property to non-farm uses. For everyone, a lack of estate planning could result in higher taxes and fewer assets for their heirs.
Currently, the top estate tax rate is 35 percent. However, there is also a $5 million exemption, meaning that estates valued below that figure do not have to pay a federal estate tax. That could change after 2012. At that time, the top estate tax rate is currently set to rise to 55 percent and the exemption is scheduled to drop to $1 million. This would mean that a $25 million estate would have a liability of nearly $13 million after 2012. Under current law, that estate has a liability of somewhat over $5 million.
In Texas and across the United States, people are often surprised by the size of their estate. It includes not just bank accounts, but also the house value and any other investments one may have. Taking the time to meet with an experienced estate planning attorney may help to ensure that the heirs of the estate do not have to sell assets just to meet the tax and debt obligations. Furthermore, the attorney may be able to assist with making sure that the estate is not mired in litigation and that one’s intentions are fully and correctly honored.
Source: Western Farm Press, “What’s the future of estate tax obligations?” Ron Smith, Oct. 19, 2011