Estate Tax

As part of the 2001 tax plan, Congress once again said "no" to the federal estate tax. In 2010, it will be repealed.* This change is the latest chapter in the federal government's long history of enacting and repealing estate taxes. There are big changes on the fiscal horizon, but they've happened before.

The Stamp Act of 1797 was the first federal estate tax in the United States and was passed to help fund an undeclared war with France; it was repealed in 1802. The Revenue Act of 1862 reinstated the estate tax in order to fund the Civil War; it was abolished in 1870. To finance the Spanish American War, the War Revenue Act of 1898 was passed, and subsequently abolished in 1902. Due to the costs of World War I, the Revenue Act of 1917 reinstated an estate tax that, in some form or other, has been in effect ever since. The new tax plan aims to abolish the estate tax in 2010.*

The history of estate taxes in America has been a long and winding road. Careful estate planning is still one of the most important ways to manage and protect your assets for your heirs.

 *Under budget rules, the estate tax is repealed for one year — 2010. Unless Congress acts in the upcoming years, the estate tax will be reinstated with pre-2001 tax law rates.

The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor.