What is an estate tax?
An estate tax is a federal tax levied on your estate when you die. If there is going to be estate tax owed, the accounting must be completed within six months of death, and any payment due must be made within three months thereafter. The Economic Growth and Tax Relief Reconciliation Act of 2001 purportedly phases out the federal estate tax over the next few years until 2010 when it repeals it entirely, and then reinstates it at 55 percent in 2011. What we will eventually have at that point isn’t clear. The following table summarizes the Act from 2001 so you have a basis for comparison: ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001 – MAXIMUM FEDERAL TAX RATE Estate Tax & GSTT Exemption Year Exclusion Top Rate 2001 $675K 55% 2002 $1.0M 50% 2003 $1.0M 49% 2004 $1.5M 48% 2005 $1.5M 47% 2006 $2.0M 46% 2007 $2.0M 45% 2008 $2.0M 45% 2009 $3.
