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Federal Estate Taxes

Initially, the federal estate tax (created in 1916) and the gift tax (created in 1924) were set at a very low rate. Then in the early 1930's, the Franklin Delano Roosevelt Administration proposed a tax system that would give the federal government more control over the distribution of wealth after somebody died. For the next 40 plus years, this translated to the government "appropriating and redirecting" a huge chunk of wealthy peoples' assets via a 70 percent marginal death tax rate.

Over the years, there have been some modifications to the estate tax system, and there have been efforts to eliminate it, but, so far, it refuses to die. Most recently, the tax laws have been changed to gradually phase out the estate taxes between 2002 and 2009. And, though everyone expected Congress to change the law again in 2009 to prevent it, 2010 began with the estate tax eliminated entirely. A temporary reinstatement was put into place, with 35 percent tax rates for 2011 and 2012. At the start of 2013, a "permanent" scheme was enacted, that sets the top rate at 40 percent. (Of course, there is nothing permanent in any area of tax law, but unlike the previous legislation, these rates don't have an automatic expiration date.)

Since it continues to plague taxpayers, we present the following sections for your education (if not necessarily your enjoyment):



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