The first enactment of an Estate Tax occurred in 1916 and applied to the estates of more than $50,000. The gift tax was enacted in 1924, repealed in 1926, and re-enacted in 1932 in an attempt to reduce estate tax avoidance through the use of gifts and was eventually integrated with the Estate Tax under the Unified Transfer Tax.

In the past few years, these taxes have slowly dwindled due to the rise in amount of exemption that may be claimed. However, the exemption is due to decrease to $1 million in 2011 and thereafter.

Depending on how much you own when you die, your estate may have to pay estate taxes before your assets can be fully distributed to your beneficiaries. Estate taxes are different from probate expenses and income taxes. Some states also have a death and inheritance taxes and it is possible to be exempt from federal estate tax and still owe state tax.

Federal estate tax is expensive with the current rate for 2008 being 45%. The estate tax must be paid and usually within nine months after death. Since most estates are not prepared to distribute large amounts of cash, assets often have to be liquidated.

Current Estate Tax Schedule :

At Clay Thomas, PC we assist clients in reducing or eliminating estate taxes by giving counsel regarding:

• Maximizing exemption use.
• Removing assets from your taxable estate.
• Tax-Free Gift Strategies.
• Trust Selection and Management.
• The fitness of Family Limited Partnerships (FLiPS).
• Probate avoidance.