The federal estate tax is much maligned in some quarters because when you go looking for logic to support the tax you tend to come up empty. As a result, many people feel as though they are being asked to part with hard-earned money that would otherwise have gone to their loved ones unfairly.
Some individuals call the estate tax the death tax, and though proponents of the tax feel as though this is a sarcastic and dismissive distortion of the levy there is literal truth in this designation.
Let’s say that you earmark a certain percentage of every paycheck that you earn as your savings. This check that you get is not your entire pay. A large percentage of your gross earnings was removed to pay income tax and payroll tax. So the money that you save is coming out of whatever you have left over after you paid your taxes.
Your savings can sit in the bank for as long as you live without being taxed any further. And of course this is as it should be. However, when you pass away the taxable portion of these funds is subject to the estate tax, a levy that was triggered by the event of your death.
Those who would say that there is no logical foundation for a death tax make a pretty good point. But the fact of the matter is that the tax exists, and if you are exposed it is poised to consume a significant percentage of your legacy.
Strategies do however exist that can reduce or even eliminate your estate tax liability under some circumstances. If you would like to discuss them with an expert, take action right now to arrange for a consultation with a good SC estate planning lawyer.
John Kuhn, Estate Planning Attorney
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