Key Estate Planning Numbers Are Changing in 2006

A number of important estate planning numbers will change when the clock strikes midnight on December 31.

Whatever you own is subject to the federal estate tax upon your death, but not all estates are taxed. The federal estate tax exemption is rising to $2 million in 2006. In 2005, the exemption was $1.5 million. This exemption will increase incrementally until it reaches $3.5 million in 2009. Unless Congress acts, in 2010, the estate tax will be repealed in 2010 and then will revert to $1 million in 2011.

In addition, the generation skipping transfer tax exemption increases to $2 million. The tax applies when you give money to your grandchildren.

At the same time, the annual gift tax exclusion is rising to $12,000. For more on this, click here.

In addition, there will be changes in the deductibility of long-term care insurance premiums from taxes. For details on this, click here.

For more on estate taxation and gifts in general, click here.

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