and Gift Planning
planning can save thousands of dollars!
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.
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estate tax will be repealed in 2010, but the gift tax will be retained.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-2001
Tax 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.
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 $11,000 per year per recipient.
(This amount is adjusted annually for inflation.) 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 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
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 generally make unlimited transfers to your spouse either
during your lifetime or through your estate. There are generally
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 your estate.
with your estate planning, contact us.
Stegent & Price, LLP
24 Greenway Plaza, Suite 515
Houston, TX 77046
Fax: (713) 840-0012