Oxburgh Row Financial Blog

zbooks.jpg

Federal estate taxes seem to be in the news a lot these days, but did you know that most people don’t pay this controversial tax? Only the estates of the wealthiest 0.2 percent of Americans — roughly 2 out of every 1,000 people who pass away — owe any federal estate tax at all.

The reason: The federal estate tax exemption increased in 2015 to $5.43 million from $5.34 million in 2014. A married couple combining their exemption may shield up to $10.86 million from federal estate tax. Most Americans don’t have estates valued that high. And those that do can employ a variety of strategies over time to reduce their family’s estate tax burden.

A more common estate tax issue is one created at the state level. A number of states levy taxes on estates valued as low as $1 million. Depending on your state, your estate could include your home, your retirement accounts and life insurance policies. When you combine the value of all of your assets, you can see why so many families end up paying estate taxes at the state level.

That’s why it’s so important not to neglect estate planning — both at the state and federal level — as you reach your peak earning years. By beginning estate tax planning early, you can have years to use a variety of tools to lessen the impact of estate taxes on your family. Questions? We’re here to help you with all aspects of estate planning.