The United States government has scheduled to reinstate the federal estate tax on January 1, 2011. This new version of the tax will impose a levy of up to 55% on estates valued at more than $1 million. According to a recent USA Today article, this new estate tax would not only affect the upper class but would also affect many Miami middle class families as well. Additionally, the new estate tax could result in more will and trust disputes and probate litigation due to the large amounts of tax being taken out of estates, effecting the payout of inheritances.

As an example, take the recently deceased New York Yankees owner George Steinbrenner. At the time of his death, his net worth was estimated at $1.5 billion dollars. Had Steinbrenner died after Jan. 1, 2011, his heirs would have paid nearly $500 million in federal estate taxes. Again, this is an upper class estate example but many critics believe this new estate tax will also greatly affect the those not in the super rich category: the middle class.

According to reports, the proposed $1 million exemption would greatly affect many families, not considered to be wealthy. For instance, if a person owns a home, an IRA or 401(K) account and a savings account, it will be extremely easy for many families to be in the same situation as a person with a much greater estate.

Additionally, those living in areas with high property tax are also vulnerable to the estate tax. For example, if your grandparents purchased a home in the '60s for $32,000 and now its valued at $1 million, they would have to pay this new estate tax if they had additional savings to claim.

This new federal estate tax is a popular topic currently in the industry and we plan to post updates containing any new information when it becomes available.

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