and Gift Planning
little planning can save thousands of dollars!
can't 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.
Over the coming years, the tax law 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tax will be repealed in 2010, but the gift tax will be retained.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 unless Congress
acts to make changes once again. In the midst of these phase-in
and phase-out provisions, a little planning can save thousands
may 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 $12,000 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 $24,000 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 estate tax exclusion.
You can make unlimited gifts to pay for another individual's
medical expenses or school tuition as long as your payments
are made directly to the institution.
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 make unlimited transfers to your spouse either during
your lifetime or through your estate. There are 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.
assistance with your estate planning, contact us.
Le & Company
Certified Public Accountant
2150 Ringwood Avenue San Jose, CA 95131
(408) 433-1788 Fax: (408) 521-0743