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Home » What Is Your Definition Of Wealth?

What Is Your Definition Of Wealth?

April 27, 2012Estate Planning, Taxes

There are those who say “tax the rich” and this is a populist battle cry that make sense to some people.  But when it comes to the Federal estate tax and the gift tax with which it is unified you have to be careful that you are informed and that you are not advocating against your own interests.

There are individuals who float the notion that these federal levies are something that ordinary people do not have to worry about because they are only imposed on the wealthiest Americans.

But in fact, any assets that you transfer to your family members either when you are alive or after you pass away that exceed the unified estate/gift tax exclusion amount are subject to taxation. And this dividing line may not be as high as you think it is.

The rate of the gift/estate tax right now is 35%, and this number is scheduled to rise to 55% when the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 sunsets at the end of this year.  At that time the exclusion is going down to just $1 million from the $5.12 million that is in place right now (assuming no changes to applicable laws take place in the meantime).

Let’s say that you have traversed a successful career path for 30 or 40 years, made intelligent investments, and perhaps inherited some money from your parents and grandparents along the way.  You could well be in possession of assets that exceed $1 million in total value while considering yourself to be in quite ordinary economic company.

So the suggestion here is to work alongside a good Indianapolis estate planning lawyer to make sure that your assets are situated in a tax efficient manner rather than assuming that you are safe from these taxes because you do not consider yourself to be wealthy.

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Paul A. Kraft, Estate Planning Attorney
Paul A. Kraft, Estate Planning Attorney
Paul Kraft is Co-Founder and the senior Principal of Frank & Kraft, one of the leading law firms in Indiana in the area of estate planning as well as business and tax planning.

Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
Paul A. Kraft, Estate Planning Attorney
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