Americans can shelter $675,000 worth of assets from estate tax, assuming a death in 2001. The new tax law accelerates the $1 million shelter to 2002 and boosts that amount, in stages, to $2 million in 2006. A further increase, to $3.5 million, is planned for 2009. All the while, spousal bequests remain tax-free.
Therefore, you should review the wording of your estate planning documents to see that they comply with the new law. Review your plans to keep a proper balance between how much passes to your children and how much to your spouse. If your plan calls for leaving the maximum amount to your children, tax-free, that would mean a $2 million bequest, if you die in 2006-2008, and might leave little or nothing for your spouse. You’re probably better off leaving a percentage of your estate to your children, up to a specified cap, so you won’t impoverish your surviving spouse.
