The one constant in life is taxes. We are taxed on nearly every good and service we purchase. We drive down a freeway, come upon a toll, and we are taxed. In fact, on average, you pay nearly $250 in gas taxes every year. We are taxed on property we own. We are taxed on our income. We pay taxes on stock dividends. And finally, we are taxed on assets we leave behind when we die. Not even death excludes you from taxes. A person making an average wage of $45,000 over their career can pay hundreds of thousands of dollars into the tax system during their lifetime.

So where did the idea of having an estate tax come from? An estate tax, or “death tax,” can be linked to ancient Egypt. Nearly 2,000 years ago, Caesar Augustus imposed a “Vicesina Hereditatium.” This was one of the first known estate taxes that taxed gifts given away when an individual died, with the exception of gifts going to close relatives. In 1797, Congress passed a law requiring federal stamps on estate planning documents and the distribution of assets. Stamps cost anywhere from ten cents to one dollar depending on the amount of the distribution. This tax was repealed in 1802. By 1862, an estate tax was reintroduced as a way of raising federal revenues during the Civil War. It was again repealed in 1872. By 1898, the U.S. government again needed revenue to fight the Spanish-American War. The estate tax was again reintroduced. It was then repealed in 1902. Yet again, in 1916, the estate tax was reintroduced as a way to help raise federal revenues during World War I. The estate tax has been in play ever since.

Estate taxes are not going away anytime soon. They have been a consistent part of the current tax code in various forms for 96 years. You can greatly minimize the amount of your assets going towards estate taxes by engaging in smart, proactive estate planning. It is important to work with an estate planning attorney that has expertise in tax laws so you can successfully guide your estate plan away from devastating taxation. By creating a customized estate plan, you can preserve your assets for your loved ones, rather than letting them disappear through the fog of estate taxation.

For Additional Information:

Forbe Article

IRS Article

Minimizing Estate Taxes

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