Avoiding Estate Tax

Inheritance taxes and death taxes are basically the same thing as estate taxes. They are a tax imposed by the government, and generally speaking, they have nothing to do with probate. Smaller estates don’t have to pay estate taxes, so most families simply don’t worry about them. Big estates can often avoid actually paying an estate tax by simply using the legal tools a lawyer has available for advanced estate planning. If you pay estate taxes, you are voluntarily paying them, because if you plan for them, you don’t have to pay them. The rich don’t lose a dime when dad dies, so why don’t you do your estate planning and avoid all of the estate taxes?

Believe it or not, every penny of a deceased person’s estate is subjected to the estate tax and the full estate tax is calculated. 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 actual value of the property that an estate can pass, without actually having to pay an estate tax, changes frequently. It is actually the credit amount that changes and not the estate tax rates and brackets.

The credit can be used to offset either a gift tax or an estate tax, which are a "unified tax" under the IRS Code, thus it is known as the "unified credit". Gift tax and estate tax liabilities, or a combination of the two tax liabilities, can be offset by the amount of the unified credit. You will have to actually look up the unified credit amount each time you want to know what it is, because it changes often. Whatever the unified credit is, the amount of property that generates a gift tax or estate tax exactly equal to the unified credit amount is known as the "exemption equivalent". People often say, "You can pass $2 million without an estate tax". They are really saying that the unified credit will offset the tax generated by the first $2 million in property passed through a gift or estate inheritance.

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. Inflation allows estate values to gradually increase, and many families are shocked when they actually end up paying estate taxes after dad dies. The estate tax rate on the first dollar, where there is actually an estate tax payable, is close to 50%. If the estate is only a half a million dollars over the exemption equivalent, there will be a payable estate tax of about $250,000. It may cost $10,000 at the attorney’s office, but if you can deliver an additional quarter of a million dollars to your family, it is money well spent.

Lee R. Phillips’ FREE DVD, Using the Law to Make Money and Protect Your Assets, coupled with his new book, Guaranteed Millionaire, shows you how to remove life insurance from the estate tax problem. With the book and DVD, you will learn how a couple can use a trust to move twice as much property to their heirs with having any estate tax issues. There are a number of legal options available, if you don’t eliminate your estate taxes by getting the life insurance out of your estate and getting twice the normal amount of property down to your family without an estate tax.

In the FREE DVD and book, you will learn about LLCs, Corporations, Family Limited Partnerships, and other legal tools an attorney can use to solve your estate tax problems and get some asset protection. Act now and order Guaranteed Millionaire with the FREE DVD, so you can eliminate estate taxes and get great asset protection.