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McCurrie McCurrie
& McCurrie, L.L.C.

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The Return of Federal Estate Taxes, Monster under Middle-Class Beds

In 2011, the estate tax is set to return, by all accounts bigger and "badder" than ever. A lot of the focus around estate tax has centered on the very wealthy. For example, as Sandra Block reported in USA Today, George Steinbrenner's death earlier this month, in a year with no estate tax, likely saved his family close to $500 million in estate taxes.

If the Yankee's patriarch had passed away in 2011, his heirs would have received much less.

As some estate planning attorneys have pointed out, while the very rich will be affected by the reinstated estate tax, so will those in the very middle of the middle class. Starting on January 1, 2011, any individual with an estate worth more than $1 million could lose 55 percent of that value to estate taxes.

That doesn't have to be $1 million in the bank, either. Property value, cars and even stamp collections all count as a part of the estate and can, therefore, be taxed. After letting things slip this year, you can bet that Congress will be doing everything they can to siphon cash from your estate after you are gone.

The root of the current turmoil surrounding the estate tax is, like most stalled initiatives, partisan bickering in Washington. The Obama office is currently attempted to push the estate tax exemption up to $3.5 million, which is where it was in 2009. Passed in the House, the bill was blocked by Republicans in the Senate late last year.

This month Republican and Democrat lawmakers teamed up to introduce new legislation that would bump the estate tax exemption even higher, to $5 million, levying a 35 percent tax rate on any assets beyond that.

However, with the national deficit soaring and the government still writing checks, it seems unlikely that lawmakers will be willing to compromise such a money-maker. If there were ever a time for planning your estate, it is now.

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