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 law 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 The estate tax will be repealed in 2010, but the gift tax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 unless
Congress acts to make changes once again. In the midst of these phase-in and
phase-out provisions, a little planning can save thousands of dollars.
You may be surprised
what your estate is worth. Add up the value of all your assets. Don't forget
life insurance which may fall into your estate. If your total value exceeds
the exemption amount, you should look into what a few simple planning techniques
can save your family at estate time. In
addition, there are some very effective estate planning ideas that can also
cut your current income tax bill.
here to use an estate planning calculator to help you determine what your
estate is worth.
Current tax law allows you to give away a certain amount each year to as
many recipients as you choose. Your spouse may join in the gift even if
he or she is not an owner in the transferred asset. This means that you
could transfer double the exempt amount each 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 estate tax exclusion.
You can make unlimited gifts to pay for another individual's medical expenses
or school tuition as long as your payments are made directly to the institution.
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.
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.
With proper planning, certain life insurance proceeds can be kept out of
with your estate planning, contact us.
Stevens Lyon & Hagerty CPAs
1033 Montana Ave
Santa Monica, CA 90403
(310) 394-8120 Fax
28382 Constellation Road
Valencia, CA 91355
(661) 257-1290 Fax