2007-07-20 14:45:35 · 8 answers · asked by 624787 1 in Business & Finance ➔ Taxes ➔ United States
Look into trusts and properly drawn up living wills. Your CPA or lawyer should point you in the right direction.
2007-07-20 14:49:28 · answer #1 · answered by CoasterGal 4 · 0⤊ 1⤋
Federal estate tax only applies to estates larger than $2 million this year. The limit goes up to $3.5 million in 2009 and under current law, there is no estate tax in 2010, then it reverts to $1 million in 2011 and beyond. (All that inconsistency is brought to you courtesy of politics...and if either party wins both the presidency and control of Congress, I'd expect changes to the 2010 and beyond amounts before we ever get to those years.)
States have different limits.
The only way I know to avoid the tax is to make sure your estate is below those limits when you die. The quickest, easiest, and cheapest (because you don't need a lawyer) way to do that is to give the money away while you're still alive. You can give up to $12,000 a year to as many people as you'd like without paying "gift tax". If you're married, your spouse can also give $12,000 which means you can give a combined gift of $24,000 to each person. If you have four children and each are married, you and your spouse can each give $12,000 to each of your children and each of their spouses. That's a total of $192,000 per year.
If you don't want to do it that way - or are so far over the limit that gifts alone won't be enough to bring your estate size down to the limit, you can get a lawyer to draw up a trust. That will cost you in fees but if properly done, can save your heirs more than the fees in taxes.
2007-07-20 22:20:35 · answer #2 · answered by Dave W 6 · 1⤊ 0⤋
umm ... the estate is what pays any estate tax. Heirs receive any legacy tax free.
of course, if the estate tax reduces your estate by a lot, then there is less for the heirs to receive.
***
In addition to getting proper legal advice, you might want to consider moving out of the United States and to a country that doesn't tax estates.
While it is by no means certain, it sure does look like the Democrats will try to increase estate taxes by 2009. Depending on what they pass and whether they win the Presidency, we could return to the days of near confiscatory taxation of large estates [over $5 million or over $50 million or whatever they pass].
Finding somewhere you'd be willing to live and that would be willing to have you, AND has no estate taxes might be a bit tricky -- you'll need advice on that as well.
GL
2007-07-20 22:03:08 · answer #3 · answered by Spock (rhp) 7 · 0⤊ 1⤋
Die in 2010 when the estate tax is eliminated. Unfortunately it comes back in 2011.
There are ways to minimize estate tax for a married couple. (An AB living trust).
You can give your heirs money while you are alive ($12,000 a year to each heir) which will minimize the size of your estate when you die.
2007-07-20 23:44:14 · answer #4 · answered by skipper 7 · 0⤊ 0⤋
Have an estate below the limit to owe estate taxes.
If your estate is larger than that ($2 million now, continues to rise until 2010, then reverts to lower limit), talk to a lawyer who specializes in estate planning.
2007-07-20 21:48:27 · answer #5 · answered by Judy 7 · 2⤊ 0⤋
How much do you have? You have to have at least 2 million before it comes into play. It is going up to 3.5 million in 2009. Just don't die until then :-)
2007-07-20 21:50:42 · answer #6 · answered by Anonymous · 0⤊ 0⤋
Talk with your attorney and/or your financial adviser and/or your accountant about a trust.
I wish you well!
VTY,
Ron B.
2007-07-20 22:02:03 · answer #7 · answered by Ron Berue 6 · 0⤊ 0⤋
It's really easy: die destitute.
2007-07-20 21:48:14 · answer #8 · answered by Stuart 7 · 1⤊ 0⤋