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Table 15.2

New Exclusion Allowance Amounts

Year 2002–2003 2004 2005 2006–2008 2009 2010 2011*

New law $1,000,000 $1,500,000 $1,500,000 $2,000,000 $3,500,000

Old law $700,000 $850,000 $950,000 $1,000,000 $1,000,000

Law repealed $1,000,000

$1,000,000 $1,000,000

YOU CANT TAKE IT WITH YOU

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As far as state taxes go, many states base their estate and inheri- tance taxes on the amount of the federal credit allowed for death taxes paid to a state. The new tax law not only modifies the credit, it also phases it out. Some states, including California and Florida, are prohibited by their state laws to enact an inheritance tax, but most states aren’t. Whether the states will individually step in and enact their own inheritance taxes remains to be seen. But if they do, they will each be able to establish their own exemptions and tax rates, as well as define what can be taxed.

The first step to estate planning is to write your will. The next steps are all based on whether you and your financial planner think that you need any form of advanced estate planning. Remember, estate plan- ning is not based on your need now; it’s based on what your estate is estimated to be worth years from now. Perhaps a will is all you will need, especially if you believe that you will not live past the year 2010. But, you may find that you need much more than just a will.

DO I NEED A WILL?

As a matter of fact, yes, I would say you probably need a will. A will is the simplest way of transferring your property to someone else (your beneficiaries or heirs) after you die. It will also name the people (the executors) who you want to carry out your wishes. Most people

*Barring any further action from Congress, the estate taxes will be reinstated at their previ- ous rates in 2011.

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