ESTATE TAX PLANNING
Like all tax law, estate tax laws are always changing. After a few years of extreme uncertainty in the laws, effective January 1, 2012, Congress passed some long-awaited "permanent" estate tax laws. One of the things they decided was that the size of an estate which would pass to heirs without imposing estate tax would be $5,000,000 and that it would be annually adjusted for inflation. This freed most Americans from worrying about estate tax. They also set the estate tax rate at 40%.
Another item Congress decided to keep was the portability of the estate tax exemption between spouses. This means that if a married person dies and has not used his entire $5,000,000 deduction, his spouse can add the unused amount to her lifetime exemption. So a married couple can exclude an inflation adjusted $10,000,000 from estate tax. Portability of the unused exemption is not automatic. It requires the filing of an estate tax return (Form 706).
If you have a taxable estate, it is important to do sophisticated tax-advantaged planning to maximize the value of your lifetime exemption and other benefits. Such planning strategies are beyond the scope of this article. If you would like further information or referral to a competent estate tax attorney, please contact me. If you have already established a plan, but have not been keeping accounting records or filing annual tax returns, please contact me so that we can determine the best course of action to preserve your plan. Even though your plan is income tax neutral, there are probably accounting and tax filing requirements to be met to keep it estate tax exempt. I would be pleased to discuss this with you.
Another item Congress decided to keep was the portability of the estate tax exemption between spouses. This means that if a married person dies and has not used his entire $5,000,000 deduction, his spouse can add the unused amount to her lifetime exemption. So a married couple can exclude an inflation adjusted $10,000,000 from estate tax. Portability of the unused exemption is not automatic. It requires the filing of an estate tax return (Form 706).
If you have a taxable estate, it is important to do sophisticated tax-advantaged planning to maximize the value of your lifetime exemption and other benefits. Such planning strategies are beyond the scope of this article. If you would like further information or referral to a competent estate tax attorney, please contact me. If you have already established a plan, but have not been keeping accounting records or filing annual tax returns, please contact me so that we can determine the best course of action to preserve your plan. Even though your plan is income tax neutral, there are probably accounting and tax filing requirements to be met to keep it estate tax exempt. I would be pleased to discuss this with you.