HOW CAN MY ESTATE PLAN LOWER THE FEDERAL TRANSFER TAX LIABILITY?
Everyone gets a credit against Federal Estate and gift taxes that lets you transfer up to $625,000 tax free. Individuals and married couples with a total estate value less than $625,000 don’t have to worry about gift or estate tax. Those with an estate of less than $1,000,000 should have no fear of the generation skipping transfer tax. For those who are married, there is an unlimited marital deduction. All estate taxes can be avoided upon the death of the first spouse to die. But the surviving spouse would have to remarry and give his/her entire estate to the new spouse in order to get another unlimited marital deduction. Most people would rather their children or other relatives benefit from the estate, rather than a new spouse and his/her family. An estate plan can take advantage of certain tax avoidance techniques for those who have accumulated some wealth; this gives more of your property to your intended beneficiaries, instead of giving it to the federal government. Some of these
Everyone gets a credit against Federal estate and gift taxes of $220,550, in 2000 and 2001, which is equivalent to transferring $675,000 tax free to your heirs. (The estate tax exemption amount increases slowly to $3.5 million in 2009; the estate tax is totally eliminated in 2010 and reinstated in 2011 at an exemption level of $1,000,000.) Those with an estate of less than $1,060,000 (in 2001) should have no fear of the generation skipping transfer tax (the GST drops back to $1,000,000 in 2002 and thereafter matches the gradual increases in estate tax exemptions in effect for the calendar year. The GST is repealed in 2010, but reinstated in 2011). For those who are married, there is an unlimited marital deduction. All estate taxes can be avoided upon the death of the first spouse to die. But the surviving spouse would have to remarry and give his/her entire estate to the new spouse in order to get another unlimited marital deduction. Most people would rather their children or other rel
