As Benjamin Franklin once eloquently put it, there are only two things in this world that are certain: death and taxes. While taxes in many forms are a reality for every American in one form or another, the odds of you having to face estate taxes at the time of your death are demonstrably small.
There’s been a lot in the news lately about President Trump’s tax plan, and vague as the details are, one of the main standouts is the repeal of the estate tax. Millions are praising him for this simple action, but you have to wonder why, when at present, it only impacts about 0.01% of ALL estates in the United States. You read that correctly.
The estate tax is paid by billionaires and millionaires — it is not a tax on the middle class. An estate needs to be worth about $5.5 million before a penny of it gets taxed. Only 1 estate out of every 700 deaths pays any estate tax at all.
The most common misconception about the Estate Tax is that is applies to everyone – it doesn’t. Since most uneducated people are unfamiliar that an “estate” is created at the time of death, this concept had to be explained by calling it the “death tax.” Everyone dies, so everyone’s estate must pay this, right?
Wrong. You’ll only pay something if you are ridiculously rich…and even then there are so many loopholes to help you avoid paying anything at all.
Here are some key facts about the estate tax that you need to know before any kind of tax reform gets passed through Congress…
1) The estate tax is ONLY paid on assets greater than $5.49 million (2017) per individual ($10.98 million per couple). Even billionaires pay nothing on the first $5.49 million they leave to their heirs. If your estate at the time of death is less than $5.49 million, your estate pays the federal government NOTHING.
2) Only 1 in every 700 deaths results in paying the federal estate tax, in fact the vast majority of estates (99.9%) do not pay ANY federal estate taxes.
