Publications
Avoiding Estate Tax
Estate taxes are often referred to as death taxes or inheritance taxes. They are a tax imposed by the government, and generally speaking, they have nothing to do with probate. If you don’t have a big estate, you don’t have to worry about paying estate taxes. 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.
Technically, every dime of a deceased person’s estate is subjected to the estate tax, and a tax is actually imposed. Even though a tax is imposed, most people don’t actually pay any tax, because everybody is given a credit to offset a specific amount of the estate tax imposed. The amount of property an estate can pass, without having an estate tax actually paid, changes almost annually. The estate tax brackets and the rates within each estate tax bracket don’t change. It is actually the credit amount that changes.
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. You will have to actually look up the unified credit amount each time you want to know what it is, because it changes often. The "exemption equivalent" is the amount of property that generates an estate tax equal to the unified credit amount. When somebody says that you can "pass two million dollars without an estate tax", they are really saying is that the unified credit amount that year is the amount needed to offset the estate tax generated on the first two million dollars in assets passed through the estate.
An individual can have a taxable estate and still be struggling day to day, because the estate includes the house, stocks, bonds, all the other real estate, the 401(k), IRAs, the little business, the life insurance face values, all of the personal collectables, and every other asset you can think of. Yes, the life insurance is subject to estate taxes in almost all cases. 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.
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. 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. 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.Eliminate estate taxes and get more asset protection by simply ordering Guaranteed Millionaire plus the FREE DVD, Using the Law to Make Money and Protect Your Assets.