Estate Taxes

“Estate taxes can legally be avoided for those who know the right combination of tools to use.”

You paid taxes all through your lifetime. It is hard to believe the government wants to tax your assets when you die at 40%. And they will tax every asset including real estate, investments, insurance, joint accounts, personal property, and everything else. The rules are 1) you can give as much as you want to your spouse without taxes, and 2) you can also give away your “magic number” without taxes. This is the “applicable exemption amount” for Federal Estate Taxes. This amount has changed over the years but now is $5,490,000. (2017)

Besides Estate Taxes, there are Gift Taxes and Generation-Skipping Transfer taxes. You have to file a 709 gift tax return in any year when you give one person more than $14,000 (indexed for inflation, so this “annual exemption” will grow). You have to actually pay gift taxes with that return if your non-exempt lifetime gifts exceed $5,490,000. You have to pay extra Generation-Skipping Transfer Taxes if your cumulative gifts to grandchildren or others in their generation exceed this amount during your lifetime or at your death. These are all unified again so that the applicable amount for Federal Estate Taxes, Gift taxes and Generation-Skipping Transfer Taxes are all $5,490,000.

About 20 States also have their own inheritance taxes on top of this.

There are tools we can use to legally avoid these taxes. Couples (any two persons who want to provide for each other) with over $5,490,000 should double their credit with the AB Living Trust. Otherwise your credit dies with you.

Married couples with over $10,980,000 will want the ABC Living Trust to use the “Unlimited Marital Deduction” to defer estate taxes until the second death and maybe plan around taxes entirely in the meantime.

Other tools might include the family limited partnership, the limited liability company, the asset protection trust, the qualified personal residence trust, the grantor retained annuity trust, the self-canceling installment note, the charitable remainder trust, the private foundation, and other tools.

Email us at kristenspees@gmail.com if we can help you plan to avoid these taxes.

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