Estate Planning Why You Need To Be Checking Your Plan

By: Barry Milton

Estate planning has always involved a certain amount of forward projection when it comes to future events. Given this, most people can go a few years without looking at their particular estate plan because things just don’t change that much. This is not the case this year.

2010 is the end of an epoch when it comes to estate planning. If you have the same estate plan at this time in 2011 that you have now, you have a big problem. To cut to the chase, your family and heirs could lose massive amounts of your estate if you don’t take action. What is all the ruckus about? The estate tax.

President Bush left us with many things. You might think them good or you might think them no so good depending on your political bent. One of the factual items was known as the “Bush tax cuts”. A key part of these taxes was the slow elimination of the estate tax. It was whittled down year after year until the tax rate actually became zero percent this year.

As you might guess, it is easy to put together an estate plan when the tax rate is zero percent. Alas, things become much more complex at the end of 2010. The Bush tax cuts will expire. There is political pressure to continue most of them given the Great Recession, but the estate tax is not included in this debate.

So, what will happen in 2011? It appears as though the estate tax will return to the rate it was at before the Bush tax cuts. What was that rate? Make sure you are sitting down. It was 55 percent. Keep in mind, this is only the federal tax rate. It does not include the state tax rate and any capital gains or income tax issues that arise with things like retirement accounts.

2010 is the proverbial Holy Grail year when it comes to estate planning. Alas, 2011 is shaping up to be the other side of coin. Make sure you don’t get caught out when the tax changes come – see your financial advisor today.

Article Source: http://yourfinance.co.za