Elder Law Resources:

Estate Taxation

Under the tax law enacted in 2001, whatever you own is subject to the federal estate tax upon your death, until 2010. For the year 2010, estates will be entirely free from federal taxation. However, the law that includes this provision expires at the end of 2010. Thus, unless Congress acts in the interim, the estate tax rules will then revert to those prevailing in 2002.

For 2008, the tax rate on estates is 45 percent (see box below).

That said, not all estates will be taxed while the estate tax is in effect. First, spouses can leave any amount of property to their spouses, if the spouses are U.S. citizens, free of federal estate tax. Second, the estate tax applies only to estates valued at more than $2 million in 2008, increased to $3.5 million in 2009 (see box). The federal government allows you this tax credit for gifts made during your life or for your estate upon your death. Third, gifts to charities are not taxed.

New York also has an estate or inheritance tax with a $1 million threshold.

Tax Year Tax Rate Exemption Equivalent
2001 37-55% 675,000
2002 41-50% 1,000,000
2003 41-49% 1,000,000
2004 45-48% 1,500,000
2005 45-47% 1,500,000
2006 46% 2,000,000
2007 45% 2,000,000
2008 45% 2,000,000
2009 45% 3,500,000
2010 n/a n/a