IRS Releases Estate Tax Statistics for 2001-2009

I’ve been looking over the data from the IRS Estate Tax Statistics for decedents dying between 2001 and 2009.  The data was collected as part of the annual estate tax study.  A few interesting points about the 2009 statistics:

• Due to the higher exemption amounts (which increased from $675,000 in 2001 to $3.5 million for 2009 – more on that here), the number estate tax tax returns decreased from over 108,000 in 2001 to under 34,000 in 2009.  In other words, only 34,000 of individuals who died in 2009 had taxable estates when the exemption amount was $3.5 million.  I would be curious to know what the number would drop to if the proposed $5 million exemption amount were enacted.
• Those estates that were taxable in 2009 had over $194 billion in assets.  The primary assets were stock and real estate, coming in at 30 percent and 22 percent, respectively.  Cash (11%), bonds (13%), pensions and 401(k)s (7%), and miscellaneous other assets (17%) made up the rest.
• Just under half of the decedents with taxable estates were married and another 38 percent were widowed.  And, not surprisingly, over 97 percent of those who were married claimed a marital deduction.  Only 10 percent of estates of married decedents owed estate tax.  This indicates that most of these folks had done at least some estate planning, and I suspect the majority of them had also used a credit shelter bequest.  This is a strong policy reason for making the unified credit portable (meaning that the second spouse to die could take advantage of any unused portion of the predeceased spouse’s unified credit).
• Less than half of those filing owed estate taxes!  Again, this indicates that most folks with taxable estates are doing some sort of estate planning, including marital and charitable bequests to avoid taxes at the death of the first spouse.
• Bad news for us guys.  Almost 58 percent of the decedents with taxable estates were males.  This, combined with the statistics indicating heavy use of the marital deduction, indicates that the men are dying first and leaving the estate to their wives, using the marital deduction to zero out the estate taxes at the first death.
• Approximately 19 percent of the estates claimed a charitable deduction, for a total of $16 billion in charitable deductions claimed.  But the ultra-rich appear to be the ones making the biggest donations.  Over 58 percent of the donations were made by estates with $20 million or more in gross assets, notwithstanding that these estates represented only 3 percent of filers.

It will be interesting to see how these numbers influence the policy arguments over estate tax repeal or a permanent estate tax fix.