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Making Your Estate Plan Flexible

Build flexibility into your estate plan so heirs can avoid the pitfalls of changing tax laws.

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This story appears in the July 2004 issue of Entrepreneur. Subscribe »

Death and taxes may be certain, but getting a handle on the death tax is anything but. Die this year, and the federal government says $1.5 million of your estate can pass to your heirs sans tax. The exemption rises to $2 million in 2006 and $3.5 million in 2009, before the tax disappears entirely in 2010. A year later, it reappears-with a $1 million exemption.

It gets more complicated still. Most states once had their own estate taxes written in lock step with federal law, frequently with the same exemption levels. With the federal law changing year by year, though, legislatures haven't been able to keep pace. So state death taxes are now all over the map: Oregon and Washington, for example, apply estate taxes at $850,000 this year.

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