Just How Many Federal Estate-Tax Returns Are Being Filed?

Lake Mendota boatsIt should come as no surprise that there was a dramatic drop in the number of federal estate-tax (FET) returns filed in calendar year 2010. According to the IRS, only 15,191 returns were filed compared to 33,515 that were filed in 2009. The drop, of course, reflects the increase in the lifetime exemptions from $2,000,000 in 2008 to $3,500,000 in 2009. Consider further that the number of returns filed in 2001 when the exclusion was $675,000 stood at 108,071.

The total number of deaths annually in the United States (which has a population of about 308,000,000) hovers around 2,500,000, so the number of people affected by the FET is relatively miniscule: 15,191 divided by 2,500,000, or 0.006%.

An interesting note is that in all three years the percentage of estates that included a charitable arrangement is nearly the same, at about 18%. So despite the significant increase in the exclusion over the years (it used to be $60,000 in 1976), the percentage of people making testamentary charitable gifts has not changed much. One conclusion we can draw is that the estate tax does not seem to be the controlling issue when it comes to testamentary charitable contributions.

Returns filed in 2010 also reveal that there was a mere 8,923 decedents who had estates of $5,000,000 or more out of 2,500,000 decedents for that year, or 0.0035%.

Does this mean the death of estate planning? Most certainly not. The new exemption of $5,000,000 is for this year and next year. Who knows what our tax future looks like?

Also, the most important objective of estate planning is to make sure that your assets go to those individuals and worthy organizations you wish to benefit. In the absence of planning, your most cherished wishes will more than likely be frustrated.

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