The estate tax exclusion or exemption is the amount that can be transferred before the estate tax would be applied. There is no tax on asset transfers between citizen spouses, but you would have to use a portion of your estate tax exclusion to leave tax-free inheritances to others. In 2016, the estate tax exclusion will be $5.45 million after the Internal Revenue Service applies an inflation adjustment. This represents a $20,000 increase over the 2015 exclusion. Portability A … [Read more...] about Can My Surviving Spouse Use My Estate Tax Exclusion?
The federal estate tax can be a factor for you if you will be transferring a significant amount of wealth to your loved ones. This tax is only a factor for high net worth individuals because there is a credit or exclusion that is relatively high. The exclusion is the amount that you can transfer tax-free. Any portion of your estate that exceeds the amount of this exclusion can be subject to taxation. Before we proceed, we should point out the fact that there is an unlimited marital deduction. … [Read more...] about Slight Estate Tax Exclusion Adjustment Added for 2016
When you are looking ahead toward your senior years, you may contribute into an individual retirement account. An IRA can definitely help you accumulate a nest egg that you can draw from during retirement. However, an individual retirement account can also be part of your estate plan under certain circumstances. There is a concept called the stretch IRA that can be of value when you are planning your estate. Before we look at the stretch IRA, we will provide some general information about … [Read more...] about What Is a Stretch IRA?
They say that you should use the right tool for the right job, and this old saying applies to the field of estate planning. There are numerous different asset transfer vehicles in the estate planning toolkit, and you can optimize your position if you make the right choices. Estate tax efficiency is something that is very important for high net worth families. The federal death tax comes with a 40 percent rate that can take a huge bite out of your legacy. If you are married to an American … [Read more...] about An Estate Tax Strategy for Appreciable Assets
When you are thinking about the position that your loved ones will be left in after you are gone, you would naturally wonder about taxation. Will your family members be forced to report their inheritances as taxable income? A simple answer to this question is no. An inheritance is not considered to be taxable income, but there are a number of things that you should take into consideration beyond this simple fact. Let's look at a few of them. Appreciated Assets The capital gains tax can … [Read more...] about Is an Inheritance Taxable Income?
If you are in possession of a considerable store of wealth, you should be well aware of the potential impact of the federal estate tax. Here in Indiana we do not have a state-level estate tax to contend with, but the federal death tax looms large for high net worth families. Asset transfers to your spouse (assuming your spouse is an American citizen) are not taxable under any circumstances, but transfers to anyone else, even your children, are potentially subject to taxation. The first $5.43 … [Read more...] about Are Life Insurance Proceeds Subject to the Estate Tax?
A revocable living trust is an estate planning tool that provides certain benefits, but things essentially stay the same when you convey assets into this type of trust. The trust creator is called the grantor of the trust, and the trustee is the trust administrator. The grantor will typically act as the trustee throughout his or her life. If you create this type of trust, you still control the assets that you conveyed into the trust. You are retaining incidents of ownership in legal … [Read more...] about Do Assets in a Living Trust Get a Step-Up in Basis?
They say that no good deed goes unpunished. Most people think that gift giving is a very good thing, but the tax man sees it as an opportunity to take his share. There is a federal gift tax in place, and you should be aware of this tax when you are making financial decisions. Fortunately, there are some gift tax exclusions that allow you to transfer a certain amount before the gift tax would become applicable. One of them is the annual per person gift tax exclusion. You can give up to $14,000 … [Read more...] about What Are the Gift Tax Exclusions?
When you are looking into the subject of estate planning, you may hear about the federal estate tax and assume that you should be concerned. If you are exposed, you should be extremely concerned, because this death tax carries a 40 percent maximum rate. Fortunately, most people are not exposed to the federal estate tax, because there is a credit or exclusion that is relatively high. The exclusion is the amount that you can transfer before the estate tax would be applicable. It is updated each … [Read more...] about Is Every Estate Subject to the Estate Tax?
Tax efficiency can be an important consideration when you are positioning yourself financially. This comes into play throughout your life, and it is also a factor when you are planning your estate. Certain types of trusts can be effective to provide tax efficiency under some circumstances, and there are other types of trusts that would not provide tax efficiency. Let's look at the facts. Federal Estate Tax There is a federal estate tax that high net worth families must … [Read more...] about Can a Trust Provide Tax Efficiency?