Here Comes 2011 (and the Return of the Estate Tax)

Happy New Year! Although much of the 2010 income tax rate structure remains the same into 2011, plus the sweetened one year 2% reduction in the employee paid FICA tax, the estate tax has been resurrected. The 2011 estate tax looks nothing like the 2010 estate tax.

Why?

For all of 2010, there was no estate tax.

Although the planned one year estate tax holiday had been on the books for nearly a decade, as recently as early 2010 virtually no one thought 2010 would go by without any legislation restoring the tax to some level. But that's Congress for you (and me, for that matter). Regardless, the men and women of Capitol Hill finally came to an agreement last month. Consequently, the good year of 2011 brings with it a new estate tax structure. The new estate tax rate is 35%. The new amount exempt from the tax is $5,000,000. Like before, individual can choose to give an unlimited amount of their estate to charity - no tax is assessed on such generosity. Furthermore, an unlimited amount can be bequeathed to a surviving spouse, known as the unlimited marital deduction. However, an aggressive death tax is due on every dollar over $5,000,000 given to anyone else.