Do I need to consider an estate tax plan?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Sep 15, 2020

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The estate tax law has been revised in recent years to raise the portion of estates exempt from the tax ($675,000 in 2001 raised to $1.5 million in 2004) so that the number of estates subject to the tax has dropped (to 2.3% in 2001) and the value of the average estate that was taxed was about $2.7 million in 2001. Some proposed legislation calls for the eventual elimination of the tax over the next decade. Business owners and farmers (who may be cash poor, but rich in property or land) are among the groups that sometimes unexpectedly leave estate tax bills for their heirs. A thorough review of your insurance and financial plans should include a consideration of possible estate taxes with a knowledgeable advisor.

For those with estate tax problems, life insurance is usually the suggested funding vehicle to provide cash to pay for settling taxes and related expenses.

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