It is okay to minimize taxes on your estate

If you have an estate approaching $1 million dollars that you will be leaving to loved ones, it would be wise to investigate estate planning approaches to minimize any Federal Estate and Gift taxes that may take a bite out of that estate.

In 2007, 2008, and 2009, the estate and gift tax will exempt the first $2 million of an individual’s estate using (combining lifetime gift exemptions and bequests at death). There are various other additional exemptions such as an annual exemption of gifts to children that is currently at $12,000. In 2010, there will be no federal estate and gift tax.

No, don’t worry too much about a spate of deaths among the Bill Gates’ and Donald Trumps of the world in 2010. I am confident they have found ways to bypass much of the sting of “death” taxes. Besides, I think Donald Trump enjoys seeing himself on TV too much to die that soon. Of course, if Rosie O’Donnell beats him in the ratings, things may change.

In 2011, however, unless Congress acts first, the estate and gift tax will be resurrected with a lower $1 million exemption. Because of these revenue acrobatics, an estate plan that is good for this year may leave your estate unnecessarily exposed in just a few years. Now is a good time to get out your will and other estate planning materials and see if they will continue to be adequate into 2011.