Avoiding Estate Tax
Inheritance taxes and death taxes are basically the same thing as estate taxes. They are a tax charged by the government. Taxes and probate are two totally different concepts. Most families don’t have to worry about estate taxes, because the federal government doesn’t impose payment of the tax on "smaller estates". Even families with quite substantial estates can avoid paying any estate taxes by using several legal tools. The estate tax is called a voluntary tax, because if you plan for it, you can avoid it. The rich do their planning, so that they don’t have to pay any estate taxes. You can do the same thing.
Every dime of a deceased person’s estate is actually subject to the estate tax and a tax is levied. Most families don’t have to actually pay any estate taxes, because the IRS gives them a "credit" which can be used to pay a set amount of the estate tax charged. The estate tax "credit" limit changes almost every year. It is actually the credit amount that changes and not the estate tax rates and brackets.
The IRS has brought the estate tax and gift tax together and "unified" them. The credit we have been talking about is called the " unified credit", because it can be used to offset either a gift tax or an estate tax liability. If the unified credit can be used to offset either a gift tax or an estate tax liability, it can also be used to offset a combination of the two taxes. Because congress changes the unified credit amount frequently, when you want to know what the unified credit amount actually is, you will have to look it up. The amount of property that generates an estate tax equivalent to the amount of unified credit available to offset the estate tax is called the "exemption equivalent". So when somebody says you can pass $2 million without an estate tax, they are really saying that the unified credit amount allowed that year will offset the tax on the individual’s first $2 million of property subject to a gift tax or an estate tax.A family’s estate is bigger than they may think. The estate includes, the house, dog, cat, kids, car, stocks, bonds, the retirement accounts, all the other real estate, the little business, all of the life insurance at its face value, and every other asset that you can think of. Most people don’t think the life insurance is included, but in most cases it is included in the estate tax calculations. Because inflation quietly increases an estate’s value, lots of families are surprised when they discover they will actually have to pay an estate tax after dad dies. With a near 50% tax rate on the first dollar where estate tax is actually owed, it is important to keep the estate in check. So, an estate that is only a half a million dollars above the exemption equivalent can generate a payable estate tax of almost a quarter of a million dollars. So what if you pay the attorney his $10,000. If you can get an extra $250,000 to your family, it is money well spent.
Using Lee R. Phillips’ new book, Guaranteed Millionaire, and his FREE DVD, Using the Law to Make Money and Protect Your Assets, you will know how to move your live insurance out of the estate tax trap. The book and DVD also show a couple how to double the amount of unified credit they have available, if they use a revocable living trust. Numerous options are available to you if you can’t eliminate estate taxes by simply getting your life insurance out of your estate and passing twice the exclusion equivalent to your family. Corporations, LLCs, Family Limited Partnerships, and other legal tools are detailed in the FREE DVD and book, so you can get the asset protection and estate tax relief you want. Order Guaranteed Millionaire and the FREE DVD, Using the Law to Make Money and Protect Your Assets, now.