Estate tax could spike 55% in January - KLTV.com-Tyler, Longview, Jacksonville, Texas | ETX News

Estate tax could spike 55% in January

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By Sara Story - bio | email

TYLER, TX (KLTV) - Just days after the election, Congress must make a quick decision that could effect aging Americans. The Bush-era tax cuts are set to expire at the end of the year, and leaders in Washington must decide if they will renew the cuts. Among the exemptions is an estate-tax break, meaning Americans currently pay zero taxes on their assets when they die. This could all change come January.

Sidney Khan,85, pays his daily bills, but he says it's not these finances he's worried about. He's concerned about the money and assets he's collected over the years. Like many aging Americans, the 85-year-old wants to leave his two children a piece of his legacy but says if the Bush tax cuts are not renewed, his plan will be affected.

"That's hard earned money. We worked hard for our money, and I got the body to show for it. Consequently, this would be a disaster for the likes of my family and myself," said Kahn.

"We have so many changes that could be coming up that could really, to some degree, devastate a family," said Greg Kimmel, an Estate Planning Attorney in Tyler.

Kimmel says the tax cuts that former President Bush enacted in 2001 will expire at the end of the year, and if Congress does not renew these cuts, taxes could return to their 2001 rates. "If you pass away on or before December 31, you're estate will not pay any estate tax...But, if you pass away in January, the amount of your estate that is over the $1 million mark is going to get hit with a tax with a top rate of 55%," said Kimmel.

Kimmel says many of his clients are concerned, especially those who want to pass along their businesses to their children.

Kahn said, "I'd like to be able to do something for my kids, and they say 'Yeah, dad left me this and he left me that.' It'd be nice to do something like that."

Financial experts say people with more than  $1 million in assets will be affected if the estate tax cuts are not extended. This was the exemption mark in 2001, and is what it could return to in January.

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