How Much Estate Tax Will You Pay?

Me pay estate tax? No way, you say? Don't be so sure! I'm not talking about now, I'm talking about 20 or 30 years from now when your IRA or 401(k) grows really big and you have that $250,000 life insurance policy to protect the family. And sure the new 1997 Tax Bill raises the limit to $1,000,000 but do you realize how slowly that happens? And do you realize how many people will be "estate millionaires" in 20 or 30 years? It will be a middle class phenomenon. Let's just hope they increase the unified credit by then. Stick in the numbers and see for yourself. And remember, unless you use a trust your life insurance proceeds are added to your estate and may get hit with the estate tax! See for yourself:

Current IRA/401(k) Balance IRA/401(k) Yield IRA/401(k) Contributions/Year from to After-Tax Investments After-Tax Yield After-Tax Contributions/Year from to Life Insurance Face Value Home Market Value Mortgage Balance Years Remaining of Mortgage Mortgage Payment (Prin + Int) Mortgage Interest Rate (%) House Appreciation (%) Cash/Checking Balance Personal Property Automobile Value Automobile Loan Balance Inflation Annual Gifting starting Do you have a credit shelter trust?   No Yes

My Assumptions: These are very general. I assume:

• Your contributions increase with inflation since they are tied to your salary.
• Your life insurance amount increases with inflation since it is often tied to your salary as well.
• Cash and Personal Property increases with Inflation
• Car Equity stays the same since cars actually depreciate and get bought and sold alot over time. (i.e. it's too complicated!) Over time the value of your car becomes a trivial percent of most peoples' estates anyway.
• Congress does not change the unified credit changes before 2010. Let us hope and pray that by then someone with a brain in Washington will clean up this mess!

Year	IRA/401(k)	Other Investments	Life Insurance	Home Equity	Cash	Personal Property	Car(s)	Total	Unified Credit	Estate Tax
2021	0	0		0	0		0	0	1,000,000	0
2022	0	0	0	0	0	0	0	0	1,000,000	0
2023	0	0	0	0	0	0	0	0	1,000,000	0
2024	0	0	0	0	0	0	0	0	1,000,000	0
2025	0	0	0	0	0	0	0	0	1,000,000	0
2026	0	0	0	0	0	0	0	0	1,000,000	0
2027	0	0	0	0	0	0	0	0	1,000,000	0
2028	0	0	0	0	0	0	0	0	1,000,000	0
2029	0	0	0	0	0	0	0	0	1,000,000	0
2030	0	0	0	0	0	0	0	0	1,000,000	0
2031	0	0	0	0	0	0	0	0	1,000,000	0
2032	0	0	0	0	0	0	0	0	1,000,000	0
2033	0	0	0	0	0	0	0	0	1,000,000	0
2034	0	0	0	0	0	0	0	0	1,000,000	0
2035	0	0	0	0	0	0	0	0	1,000,000	0
2036	0	0	0	0	0	0	0	0	1,000,000	0
2037	0	0	0	0	0	0	0	0	1,000,000	0
2038	0	0	0	0	0	0	0	0	1,000,000	0
2039	0	0	0	0	0	0	0	0	1,000,000	0
2040	0	0	0	0	0	0	0	0	1,000,000	0
2041	0	0	0	0	0	0	0	0	1,000,000	0
2042	0	0	0	0	0	0	0	0	1,000,000	0
2043	0	0	0	0	0	0	0	0	1,000,000	0
2044	0	0	0	0	0	0	0	0	1,000,000	0
2045	0	0	0	0	0	0	0	0	1,000,000	0
2046	0	0	0	0	0	0	0	0	1,000,000	0
2047	0	0	0	0	0	0	0	0	1,000,000	0
2048	0	0	0	0	0	0	0	0	1,000,000	0
2049	0	0	0	0	0	0	0	0	1,000,000	0
2050	0	0	0	0	0	0	0	0	1,000,000	0
2051	0	0	0	0	0	0	0	0	1,000,000	0
2052	0	0	0	0	0	0	0	0	1,000,000	0
2053	0	0	0	0	0	0	0	0	1,000,000	0
2054	0	0	0	0	0	0	0	0	1,000,000	0
2055	0	0	0	0	0	0	0	0	1,000,000	0
2056	0	0	0	0	0	0	0	0	1,000,000	0
2057	0	0	0	0	0	0	0	0	1,000,000	0
2058	0	0	0	0	0	0	0	0	1,000,000	0
2059	0	0	0	0	0	0	0	0	1,000,000	0
2060	0	0	0	0	0	0	0	0	1,000,000	0
2061	0	0	0	0	0	0	0	0	1,000,000	0
2062	0	0	0	0	0	0	0	0	1,000,000	0
2063	0	0	0	0	0	0	0	0	1,000,000	0
2064	0	0	0	0	0	0	0	0	1,000,000	0
2065	0	0	0	0	0	0	0	0	1,000,000	0
2066	0	0	0	0	0	0	0	0	1,000,000	0
2067	0	0	0	0	0	0	0	0	1,000,000	0
2068	0	0	0	0	0	0	0	0	1,000,000	0
2069	0	0	0	0	0	0	0	0	1,000,000	0
2070	0	0	0	0	0	0	0	0	1,000,000	0
2071	0	0	0	0	0	0	0	0	1,000,000	0