Estate and Gift Planning

A little planning can save thousands of dollars!

You can't take it with you, but failing to plan for your estate can mean that the government, rather than your heirs, may get the major portion of your hard-earned money.

Over the coming years, the Tax Relief Act of 2001 gradually reduces estate and gift tax rates, and the exemption amount increases. The estate tax will be repealed in 2010, but the gift tax will be retained. Ironically, the estate tax will be reinstated in 2011 to pre-2001Tax Act rules unless Congress acts to extend the 2001 law. In the midst of these phase-in and phase-out provisions, a little planning can save thousands of dollars.

You may be surprised at the value of your estate. Add the value of all your assets, including any life insurance which may fall into your estate. If the total value exceeds the current exemption amount, we can demonstrate how much money a few simple planning techniques can save your family. In addition, there are some very effective estate planning ideas that can also cut your current income tax bill. Finally, don't forget about state tax consequences.

Click here to use an estate planning calculator to help you determine what your estate is worth.

Some planning possibilities:

	Gifting Current tax law allows you to give away $11,000 per year per recipient. (This amount is adjusted annually for inflation.) Also, your gifting program may be enhanced with a joint spousal gift. This means that you could transfer up to $22,000 per year to each of your heirs. To double the annual exclusion yet again, you may want to include spouses of your children. The person receiving the gift does not need to be related to you. These annual gifts do not reduce your once-in-a-lifetime estate tax exclusion.
	Property transfer If you have property which is not needed for your retirement, maybe it is a candidate for transferring during your lifetime. If it is a large income-producer, the future income will be taxed to the new owner and not to you, plus the property will be out of your estate.
	Spousal transfer You can make unlimited transfers to your spouse either during your lifetime or through your estate. There are no taxes on spousal transfers, regardless of size. But leaving everything to your spouse may not be a good idea, since doing so fails to utilize the lifetime exclusion amount in the estate of the first spouse to die. Planning will allow you to use the exclusion in both estates, and you'll be able to transfer twice as much to your heirs free of estate tax.
	Life insurance proceeds With proper planning, certain life insurance proceeds can be kept out of your estate.

For assistance with your estate planning, contact us at (301) 530-7575.