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A little planning can save thousands of dollars!

You 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.

You 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.

Many states 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.

You 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 exclusion, you should look into what a few simple planning techniques can save your family at estate time.

There are some very effective estate planning ideas that can also cut your current income tax bill.

Some planning possibilities:

  • Current 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.
  • If 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.
  • 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.

How much do you need for retirement?

What 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 officer.

Call us!

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.