The federal estate tax is of great concern to many family forest owners. This concern is valid if your estate will be subject to the tax, but most estates are not. An estate tax return must be filed if the gross estate exceeds the excludable amount, but this doesn’t mean any tax is due. The excludable amount gradually increased from $675,000 in 2001 to $3.5 million in 2009. It was repealed for deaths in 2010, but later reinstated for 2010 estates of $5.0 million or more electing to not be subject to a limited step-up in basis for assets in the hands of heirs. The excludable amount stays at $5.0 million for 2011 decedents.
The number of estate tax returns filed decreased from 108,000 in 2001 to fewer than 34,000 in 2009. The total number of deaths in the US in 2007 was a little over 2.4 million. The decline in returns filed resulted mostly from the increase in the excludable amounts. Estates filing in 2009 reported over $194,000 billion in assets. It’s not possible to breakout how much of this was due to timberland. It is included in “other real estate” category.
Overall less than one-half of estates had to pay any tax. The marital bequest played large in reducing the estate tax. Such bequests totaled $62 billion. Only 10 percent of estates with this reduction owed any estate tax. The tax paid totaled $21 billion. Charitable bequest deductions totaled $16 billion. Returns with gross estates of $20 million or more accounted for 58 percent of the tax paid, but only 3 percent of filers.
Source: IRS Statistics of Income, http://www.irs.gov/pub/irs-soi/10esesttaxsnap.pdf
Estate Planning about much more than the estate tax. Your estate plan is about much more than minimizing the estate tax due. It’s mostly about achieving your post-death goals for the assets included in your estate.