need to be aware that this area of taxation has many exclusions
and limits that differ by year. For example, if a person died
in 2008, he or she could have an estate of up to $2,000,000
without incurring a federal estate tax. In 2009, that amount
increases to $3,500,000. However, cumulative gifts exceeding
your annual limit (see below) have remained at a maximum of
$1,000,000. Currently, tax rates at the $1,000,000 level are
41% and go as high as 47%. Congress is expected to pass new
legislation in the area soon.
also tax estates. Ohio currently taxes estates over $338,333.
While the tax rate isn't as dramatic as the federal one (Ohio's
top rate is 7%, at $500,000), it affects more Ohio taxpayers.
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 exclusion,
you should look into what a few simple planning techniques
can save your family at estate time.
are some very effective estate planning ideas that can also
cut your current income tax bill.
tax law allows you to give away $12,000 per year ($13,000
as of January 1, 2009) per recipient. 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 ($26,000 in '09) 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 exclusion.
you have property that provides income which is not needed
for your retirement, it may be a candidate for transfer
during your lifetime. Future income will be taxed to the
new owner and not to you, plus the value of the property
will be out of your estate.
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
proper planning, certain life insurance proceeds can be
kept out of your estate.
much do you need for retirement?
property, if any, should one consider parting with during
his or her lifetime?
Estate and gift
planning is a very personal process. Each family plan is unique.
Effective planning should involve you, your accountant, your
attorney, and in many cases, an insurance agent and trust
Please call us
for an initial conference at no charge. We will help you assess
your need for estate and gift planning. If your financial
affairs are simple, the meeting will be short. If you have
more complicated matters, the meeting will be longer, but
the time will be well spent.