As 2009 drew to a close, most trust and estate practitioners believed that Congress would freeze the estate tax threshold at the 2009 exemption and rate structure of $3.5 million. This “fix” never happened! As a consequence, for individuals who pass away in 2010 there is presently no estate tax and new complicated rules for computing gain and loss from the sale of property inherited after 2009 have become effective.
The New Jersey Division of Taxation has proposed new rules for title insurance companies holding escrow amounts from real estate closings for the payment of transfer inheritance and/or estate taxes. New N.J.A.C.18:26-11.21 would require title companies to notify the Division in writing, within 10 days of receipt of the transfer inheritance and/or estate tax related escrow monies and to forward to the Division a copy of any HUD-1 RESPA statement and deed that issued from the transaction.
The 2001 tax law change resulted in a “repeal” of the federal estate tax structure, at least a planned repeal anyway. Under the 2001 Tax Act, the exemption amount for individuals that pass away in 2009, the exemption rose to $3,500,000 per individual. With proper planning, a husband and wife can utilize the exemption of each spouse thereby sheltering a total sum of $7,000,000 (twice the $3,500,000 exemption) from estate tax. The 2001 Tax Act also reduced the maximum federal estate tax rate been reduced to 45%. The increased exemption shelters the progressivity in tax rates effectively providing for a flat fixed rate on any excess over $3,500,000 at the 45% top bracket.
