Money Matters: Estate Tax
In the recent months we have heard a lot about taxes and tax cuts and along with that a lot of talk about estate taxes. What is an estate tax and how does it work?
It's been around a long time. There has been a lot of changes as we went through all this tax law changes. It has kind of become a political football but in general what an estate tax is. It's the tax on the transfer of wealth upon your death. That is what it amounts to. Now it use to be a lot bigger deal than it is today, for more people. When I started there was a $600,000 exemption. Meaning, if I passed away and I wanted to leave assets to my children anything north of $600,000 was taxable to 55%. It was brutal. And that has been going up for years and years. It went to a million dollars and then 1.5 million and then 2 and 2.5 and that is per person and so the rules we played with in the year 2017 it was 5.4 million, over 5.49 million per person. So if you are married obviously you have got almost 11 million that you can gift. So now with the new tax law changes they doubled that. So each person has 11.2 million dollar exemption and so if you are married it's 22 million bucks north of that you can pass on with out having to pay.