Here’s a great article by Matthew Frankell with The Motley Fool, called 2016 Estate Tax Rates. According to investopedia.com, an estate tax is a tax that is levied on an heir’s inherited portion of an estate if the value of the estate exceeds an exclusion limit set by law. Click here for the article.
In this article Frankell details the current estate tax brackets, along with the rates for each tax bracket set by federal law. (Note however, certain states impose an additional estate tax.) While the numbers may seem daunting at first, the article goes on to describe how the lifetime exemption amount (an amount you leave to your heirs that will not be taxed) allows many estates to avoid federal estate taxation at all.
For Alabama residents, this is great information to know as well because Alabama does not impose a separate state estate or inheritance tax. It collects the maximum credit allowed on the federal estate tax return.
For more information on how you can reduce and even avoid estate taxes, contact our office at (205) 578-1597.