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The Estate tax exemption has been adjusted annually for several years. I recall when it was $1,000,000 a few years ago, and it is now $3,500,000. This means that, in general, a person can leave their heirs an inheritance of $3,500,000 without them owing federal tax on the estate. You may notice that I always like to add “in general” to anything I write about that relates to the taxation system. This is because the rules vary with the circumstance, change often, and checking with your tax professional is the best course of action. Doing a little preliminary homework never hurts, though, prior to calling your CPA.
Today I ran across an estate tax calculator on Smart Money’s website. The calculator has some helpful information. It also includes links to articles about estate tax planning. Tax efficient strategies may be put into place to alleviate at least some of the tax that could be due on your estate. As with many investing strategies, the first step is to know where you are. This little calculator should be useful.