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Are You Ready for the Return of the Estate Tax?

You’ve probably heard news of the impending return of the Federal estate tax. Here’s a short description of what is happening, and what it means.

About ten years ago, Congress enacted legislation that steadily increased the amount of a person’s estate that was exempt from Federal estate tax. Through Congressional inaction, that law resulted in the Federal estate tax effectively expiring temporarily at the beginning of 2010. The ball is currently in Congress’s court and no one knows if legislators will pass any new laws to deal with the lapsing of the 2010 estate tax.

We do know, however, that the law requires that Federal estate tax will return in 2011. Furthermore, this tax will almost certainly increase, compared to previous levels. The estates of many people who would have avoided taxation entirely when the exemption amounts were higher, will then be subject to estate tax

Your Estate May be Taxable

Those who believe their estate is not large enough to be taxed may not understand all the assets that are included when determining the estate value. For instance, if all of your assets including your home, investments, personal property, vehicles, other land, family-owned business, and retirement assets add up to more than $1 million, you may have a taxable estate next year.

The highest potential estate tax rate will be 55%. A 5% surcharge for the largest estates will raise the effective maximum rate to 60%. Please also remember that most IRA and other qualified retirement plan assets are often subject to both income and estate taxes.

Nobody knows whether or not there will be an adjustment before the end of this year. But some version of the Federal estate tax will undoubtedly return on January 1, 2011. So please make sure your plans are reviewed by a professional advisor who can prepare your documents for the various scenarios.

You Need a Good Estate Plan

An estate plan is important for people of all ages and levels of wealth. Younger people, for example, need to designate the care of their minor children. People of modest means also often have specific items that they want to give to certain individuals. The state where you live and any state where you own property provide specific directives that may not fit your individual preferences. But without a valid will, your wishes may not be known.

A well-crafted will helps you plan for the future. It is in your best interest and in the interest of your heirs to make sure that your intentions are clear. Estate planning should not be a do-it-yourself project. You’ll be faced with critical decisions that a professional estate planner can help you make. And since every state has different laws, one size does not fit all.

Your Opportunity to Give

When you review your estate plan, please consider whether a gift to Peddie School would make sense in your situation.

We have all benefitted from legacy gifts, including those from donors of modest means. They have helped us to build the stability which allows Peddie School to continue our important work. You can join this community of giving by making a similar donation through your estate.

We hope this information will help you make better decisions for yourself and your loved ones. We also hope you will consider supporting Peddie School in its important mission through gifts from your will and/or trust. Please mention your wish to make such a gift when you visit with your attorney, or other financial or tax advisors. To simplify the process, consider bringing a copy of our sample gift language for your will or trust to your planning meetings.

Thank you for thinking about the impact a gift through your will can have through the work of Peddie School. For more information, please contact us.


The material presented on this Planned Giving website is not offered as legal or tax advice.
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