The Federal government is trying to decide what size of estate tax exemption citizens are going to have next year from the Federal Estate Tax. Under current law the exemption amount is currently $3,500,000.00 in 2009. If Congress does nothing the Federal Estate Tax exempt amount will be unlimited beginning January 1, 2010. I am betting we are going to see last minute legislation at the end of December to prevent the repeal of the repeal of the Estate tax for 2010.
However, state governments are also feeling the economic pinch and looking for ways to increase tax revenues. Dead people are an easy constituency to squeeze because they do not vote. For example, the State of Illinois "decoupled" its estate tax from the federal exemption amount beginning January 1, 2009. In Illinois anyone who dies this year pays an additional estate tax over anything one owns in excess of a $2,000,000 exemption from Illinois estate tax. What does the mean? If a Missouri resident dies with a $3,500,000 taxable gross estate in 2009, the taxpayer pays $0 Federal estate tax and $0 Missouri estate tax. The same taxpayer who dies in Illinois this year pays $0 Federal estate tax and $209,124 in Illinois estate tax. Picking the right state to die in for tax purposes can save some real dollars! Living on the correct side of the Mississippi can benefit one's loved ones significantly!
I think the Missouri tourism commission ought to adopt a new campaign to attract older citizens to move to Missouri before they die.
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After 2010 doesn't the exemption for estate tax revert to 1 million? So it seems that an elderly person should gift as much as possible to reduce the gov't greed grab if their estate is well over that amount.
ReplyDeleteTom