Let’s face it, most families simply won’t have to worry a lick about the federal estate tax. That’s because about 99% of unmarried people don’t have an estate that exceeds $5.49 million. And more than 99% of married couples don’t have a combined estate of $10.98 million. So, for most families, have no worries about trying to avoid the 40% federal estate tax but fail to spot this unintended tax issue of the Capital Gains Tax.
But almost every family who engages in estate planning has assets that have appreciated in value. That means there is the potential for capital gains tax at the federal level when those appreciated assets are sold.
Example: Let’s say Dad bought stock in ABC Co. for $5 per share over the years. Now, that Dad is 76 years old, ABC Co. stock sells for $60 per share. That means that there is $55 of gain in each share of stock that Dad owns. If Dad sells the stock during his lifetime, he’ll get hit hard with a capital gains tax.