May 23, 2011
(Or estate planning for married folks)
The good news is that fewer people will have to be concerned with federal estate taxes. For 2011 and 2012 the estate tax exemption for an individual is $5 million.
If you and your spouse are US citizens and one spouse dies, you can take an unlimited marital deduction in 2011 and 2012. The surviving spouse will then have to be concerned with the $5 million exemption when they die. Your will can be written to take advantage of the "portable estate tax exemption" where your unused federal estate exemption is passed on to your spouse.
You can each make annual gifts of $13,000 to family members without reducing your $5 million exemption. You can also give away unlimited amounts to relatives for college tuition or medical expenses as long as you make the payments directly to the school or medical facility. Your will can also direct donations to IRS-approved charities to keep your estate under the exemption amount.
When you gift an appreciated asset in excess of $13,000, you will be reducing your $5 million exemption, but any future appreciation of that asset will not be included in your estate.
Also consider an Irrevocable Life Insurance Trust. Here the trust owns the policy on your life so the proceeds are not included in your estate.
As always, seek professional legal and financial advice in this area.
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).