Warns of Possible 60 Percent Estate Tax for Certain Estates in 2011 Warns of Possible 60 Percent Estate Tax for Certain Estates in 2011

We've all been reading about estate taxes lately. On January 1, 2011, the Bush tax cuts will expire so we'll be back to the pre-2001 system unless Congress gets their act together soon. 

What your clients might not realize, and what Ashlea Ebeling talks about in her recent blog post (, is that for estates between $10 million and $17,184 million, a federal surtax of 5 percent will be added to their 55 percent estate tax rate for a total of 60 percent.

Ms Ebeling writes:

A 5% federal surtax, in addition to the 55% rate, applies to estates with assets between $10 million and $17.184 million. The surtax (for estates that pay all of it) wipes out the benefit of both the lower marginal rates applicable to the first $3 million of an estate's assets and the $1 million exemption. In other words, the surtax makes the effective rate 55% on the first $17.184 million of the estate-if your estate is that large or larger. Once the estate is over $17.184 million, the surtax disappears and the nominal top rate is 55% again.

So, for estates over $10 million who will be taxed at the 2001 level of 55 percent, the added surtax will make those estates the most highly taxed instead of the estates worth more than $17.184 million.  The surtax was repealed by the Bush cuts, but it returns along with the rest of the cuts unless Congress decides to pass something quickly at the end of the year.

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