Avoiding Estate Tax

The terms estate taxes, death taxes and inheritance taxes are often used interchangeably. Estate taxes are something you pay the government, probate fees are paid to your attorneys. They have nothing to do with each other. Smaller estates don’t have to pay estate taxes, so most families simply don’t worry about them. Even larger estates usually don’t have to pay estate taxes, because there are a number of legal tools that can help eliminate any estate taxes actually payable. Estate taxes are often called voluntary taxes, 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?

Technically, every dime of a deceased person’s estate is subjected to the estate tax, and a tax is actually imposed. 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.Note that the actual credit limit changes. The estate tax rates and brackets in the estate tax structure don’t change.

In the IRS code, the gift tax and estate tax are "unified", thus the credit is called 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". 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.

Lots of people are surprised to learn they actually have a taxable estate, because the estate includes the assets like the retirement accounts, stocks, bonds, little business, life insurance face values, and of course, all of the real estate. Life insurance is included in most cases, even though people have been told that their life insurance isn’t "taxable". There isn’t any income tax, but there certainly is an estate tax on life insurance.Many families can’t believe they will actually have to pay estate taxes after dad dies. Dad didn’t get any " richer", inflation simply grew his estate value above the exemption equivalent amount.The estate tax rate on the first dollar, where there is actually an estate tax payable, is close to 50%. 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. Attorneys aren’t cheap, but getting an extra $250,000 to your family makes their motley $10,000 bill look like a great deal.

When you use Lee R. Phillips’ FREE DVD, Using the Law to Make Money and Protect Your Assets, with his award winning book, Guaranteed Millionaire, you will learn how to remove your life insurance from any estate tax exposure. 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. If you don’t eliminate your estate tax problems by removing your life insurance from your estate and getting twice as much property out to the family without an estate tax, there are a number of other legal tools an attorney can use to eliminate estate taxes. Some of the other options you have are Family Limited Partnerships, Corporations, and LLCs. These and other tools are exposed in detail in the FREE DVD and book. They let you eliminate estate taxes and get a ton of asset protection. Act now and order Guaranteed Millionaire with the FREE DVD, so you can eliminate estate taxes and get great asset protection.