You’re wise to research whether you need to be concerned about estate taxes because many taxes can be minimized or eliminated altogether. There is no sense in paying more than you owe. The big tax that makes the news is the federal estate tax; you may have also heard of the gift tax.
Federal Estate Tax
The current amount that you can pass without paying federal estate taxes is $5,400,00. Husbands and wives may pass up to $10,800,000.
If your estate is likely to be close to that, it’s a good idea to consult with an estate planning attorney to consider tax planning. When determining your asset base be sure to include real estate, retirement accounts, life insurance, investment accounts, bank accounts, any monies owed to you, and valuable personal property such as collections, art, jewelry, tools, and antiques.
The gift tax also causes some concern when folks hear of the $14,000 gift tax “limit.” In actuality, there is no gift tax limit; there is just a limit on the amount you can pass to each individual each year without using some of your life time gift and estate tax credit ($5,400,000, referred to above) or paying gift taxes.
You actually pass unlimited funds using the $14,000 calendar year exclusion; this figure jumps to $28,000, if you’re married. And, you can pass $14,000/$28,000 to as many people as you would like.
You can also use that $5,400,000 per person exclusion during your lifetime if you’d like. This is in addition to the $14,000/$28,000 annual gifts you can make.
Moreover, you can also pay unlimited tuition and medical expenses directly to the provider for as many people as you would like.
If you would like to minimize or if possible eliminate federal estate and gift taxes, call our office at (858) 792-5988 for a consultation.