Proper Estate Planning

Felinton Elder Law & Estate Planning Centers Proper Estate Planning

Mindy Felinton

The Internal Revenue Code imposes a tax “on the transfer of the taxable estate of every decedent who is a citizen or resident of the United States.” There is no tax on any estate less than $10,000 in value. The tax computation on estates of higher values is “a tentative tax computed under [a rate schedule] on the sum of the amount of the taxable estate and the amount of the adjusted taxable gifts.”

Estate/Gift Tax Exemption

Estate tax updates always include the most important of credits against the tentative estate tax, the “unified credit,” an exempted portion of the taxable estate + taxable gifts value. The estate tax unified credit exemption or exclusion, $675,000 in 2001, rose to $1,000,000 in 2002 after Congress passed the Economic Growth and Tax Relief Reconciliation Act of 2001, to $2,000,000 in 2006, $3,500,000 in 2009, $5,430,000 by 2015, and to $5,450,000 in 2016.

In practical terms, taxpayers now can bequeath as much as $5.450,000 and married couples as much as $10,900,000 to heirs with no federal estate or gift taxes. The annual gift exclusion remains the same at $14,000 per individual donee. The federal estate and gift tax unified credit exemptions rise and fall with the cost of living.

Portability

Among more recent, important federal estate tax updates is the portability provision enacted by Congress in 2010 and made permanent in 2013. Portability permits a surviving spouses to claim any part of the deceased partner’s unused, residual federal estate tax exemption and donate or bequeath much more tax-free money to heirs. Portability, however, is not automatic. The decedent’s estate must file an IRS Form 706 within nine months to claim the additional exemption even if the estate is not taxable and therefore not required to file one.

Consult a First-Rate Elder Law Firm for Proper Estate Planning

Proper estate planning would make sure a taxpayer client would be aware of the nine-month portability provision filing deadline. Proper estate planning meets health care needs, preserves assets, and distributes them exactly according to client wishes.

At the Felinton Elder Law & Estate Planning Centers, estate planning options available are living trusts, testamentary trusts, durable powers of attorney, wills, and living wills; estate planning services are health care proxies, powers of attorney, probate practice, last wills and testaments, revocable living trusts, asset protection trusts, and pet trusts, but not all options are right for everyone.

Felinton is a full-service law firm with offices in Maryland, Washington DC, and Florida covering the legal issues affecting everyone interested in preparing their legal and financial affairs for the protection of their beloved survivors. Call 301-610-0055 today to ask about the latest important estate tax updates and to schedule an estate planning consultation.