Death tax relief

Death tax relief

Host : Are there any final tax breaks our listeners should be aware of?

David : Yes. I talk about estate tax strategies in my audio program on introductory personal finance, but the new law gradually increases the amount of money that is exempt from the death tax. The old amount was $600,000, a figure which has been constant since 1987.

The new law increases this amount to $1 million by 2006. Owners of closely held family businesses, however, see their exemption from the death tax immediately increase to $1.3 million, although they'll have to jump through some hoops to get this.

You still can give $10,000 annually gift-tax free to an individual, but this $10,000 figure is now indexed for inflation, in steps of $1,000.