Only two things are certain - death and taxes. But what about the combo? Is the estate tax or "death tax" inevitable?
Under the American Taxpayer Relief Act of 2012, there is a federal estate tax credit that offsets the estate tax on the first $5Million dollars transferred at death. This amount is inflation adjusted to $5.45M in 2016, and it will continue to rise. This means, with respect to the federal estate tax, a person pays no tax at death when transferring up to $5,450,000.00.
If you own assets worth more than $5Million dollars, then you need to consider estate tax planning. You probably know whether you have more than $5Million, and you probably don't. How do I know? It is a statistical prediction. According to the World Wealth Report 2013 from CapGemini Financial, there are 3.73 million Americans with at least $1Million in assets (excluding the value of their principal residence). In a country with a population of 300 million, that means only about 1% own assets worth more than $1Million. The majority of that 1% do not have $5Million. In excess of 99% of Americans will not pay any estate tax under the current system.
