Dick Clark is synonymous with New Year’s, and it is interesting to consider what would have happened to his estate if he had passed away next year rather than this year.
It is estimated that Dick Clark’s estate will wind up being worth hundreds of millions of dollars so the federal estate tax would certainly be applicable. This year the estate tax exclusion is $5.12 million, and the maximum rate of the tax is 35%. A tax of 35% on hundreds of millions of dollars is considerable to say the least.
However, as laws currently stand as soon as the ball drops on Times Square to announce the arrival of 2013 the maximum rate of the estate tax rises to 55% while the exclusion is reduced to $1 million. Once again, when you’re talking about hundreds of millions of dollars this difference in the rate equates to an enormous sum of money.
Because Dick Clark passed away this year rather than next tens of millions of dollars were potentially saved. But the family of someone who passes away next year with the same amount of money will be in a very different situation. These inconsistencies are cited by those who insist that the estate tax is fundamentally unfair.
Given these coming changes to the estate tax parameters a review of your current plan is in order during this calendar year. If you would like to evaluate where you stand take action right now and pick up the phone to arrange for a consultation with a licensed, savvy Indianapolis estate planning lawyer.
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.