Last Thursday, Hillary Clinton declared her proposal for the federal estate tax:
Currently, only estates worth $5.5 million or more pay taxes on inheritance. Clinton would lower that threshold to $3.5 million per person and $7 million per couple.
On Thursday, Clinton proposed raising the estate tax from 40 to 45 percent. For estates worth $500 million for a single person and $1 billion for a couple, it would go up to 65 percent, the highest rate since the 1980s.
The way the federal estate tax is currently structured, it would require Congress to pass legislation to implement Clinton's plan and increase the current 40% rate while reducing the current exemption of $5.45 million.
Clinton's proposed federal estate tax plan is reminiscent of Bernie Sanders plan, especially as it applies to billionaires. Further, the federal estate tax for 2009 was also 45% with an exemption of $3.5 million, just as proposed by both Clinton and Sanders.
This brief overview of some important considerations associated with the federal estate tax is by no means comprehensive. Always seek the advice of a competent professional when making important financial and legal decisions.
Steve Cook is a estate planning lawyer at Cook & Cook. Although his main office is located in Mesa, Arizona, he represents clients throughout the Phoenix, Arizona Metropolitan area including the following east valley cities: Scottsdale, Paradise Valley, Tempe, Chandler, & Gilbert.
