Call today for a consultation
501-588-4451
+
Making a Positive Difference In Your Life

Estate tax hit the 100-year mark. Anyone celebrating?

Estate taxes may not be much on the minds of many folks in Arkansas. The state doesn't have one. The federal government does, and it can take a healthy bite out of one's assets if effective estate planning isn't undertaken.

Perhaps that's one reason why the recent centennial birthday of the federal estate tax passed without a great deal of fanfare. Yes, it was Sept. 8, 1916, that the estate tax came into being in the United States, courtesy of provisions in the Revenue Act signed by Woodrow Wilson.

With the advent of that law, the income tax doubled from 1 percent to 2 percent for individuals in the lowest bracket. For those in the highest, it went from 7 percent to 15 percent. It also contained provisions calling for a tax on munitions profits and inheritances.

To soften the blow of that first estate tax, the government exempted the first $50,000 of assets transferred. Anything above that could be taxed at various rates of from 1 percent to a maximum of 10 percent on estates over $5 million.

In the intervening 100 years, a number of changes have been made in the law. For example, the first $5.45 million of an estate can now be exempted from tax. But any amount over that can face a tax of 40 percent upon transfer to heirs.

For all the changes that have taken place, a few things remain the same. As it was in the beginning, it is more cost effective for the creator of an estate to make gifts to heirs while alive, rather than pay the estate tax at death.

Many are looking at the possibility that, at 100, the estate tax is due for another round of cosmetic surgery. Whether that happens or not is something only time will tell. In the meantime, most experts would likely agree that the chances are that the estate tax is not going to go away. Planning thus remains important.

No Comments

Leave a comment
Comment Information

Robertson, Oswalt & AssociatesOffice locations

Little Rock Office
1302 Cumberland Street
Little Rock, AR 72202

Toll Free: 866-311-3815
Phone: 501-588-4451
Little Rock Law Office Map

Benton Office
17724 I-30, Suite 8
Benton, AR 72019

Toll Free: 866-311-3815
Phone: 501-588-4451
Benton Law Office Map

Heber Springs Office
307 West Spring Street
Heber Springs, AR 72543

Toll Free: 866-311-3815
Phone: 501-588-4451
Heber Springs Law Office Map

Conway Office
1237 Front Street
Conway, AR 72032

Toll Free: 866-311-3815
Phone: 501-588-4451
Conway Law Office Map

Review Us Review Us Review Us
  • Local|
  • Toll Free|
  • Fax 501-537-4641|
  • Follow Our Firm