Released: October 16, 2011

How to minimize estate taxes, even if you’re not rich

Source: Karen Hube, The Washington Post

It’s easy to gripe about the rich manipulating the rules to lower their tax rates, but sometimes it’s better to simply borrow a few pages from their playbook. Although finagling a low tax rate on income — as Warren Buffett talks freely about — is difficult for regular salaried workers, there’s another area where modest taxpayers have something to learn from the wealthy: minimizing estate taxes. With the IRS’s monthly interest rate at its lowest level on record at 1.4 percent, the stock market down and housing values depressed, this is a prime time to maximize tax-saving wealth transfer strategies. “The effectiveness of many strategies depends on being able to get a higher rate of return than the IRS interest rate – now, with the rate so low, and values depressed, that shouldn’t be hard to do,” says Alan Augulis, an estate planning attorney in Warren Township, N.J. People of modest wealth shouldn’t assume they won’t be affected by estate taxes. Even though the current federal 35 percent estate tax kicks in on estates topping $5 million (or $10 million for couples), in 2013 the federal estate tax exemption is scheduled to drop to $1 million, and the tax rate will jump to 55 percent unless Congress acts.

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