Planning

You can't take it with you, but with careful planning, it's possible to provide your heirs, loved ones and friends with a significant portion of your wealth.

Wills

A will is a legal document that specifies who receives what at your death, and who will manage your estate.

Recent Changes

Under current tax law, the federal estate-tax rate is gradually reduced to 45% between 2005 and 2007 while the amount exempt from the tax is gradually increased, after which the tax is repealed for the year 2010 only.

Assets Subject To Estate Tax

Federal estate tax is a levy on the transfer of property at death. Your gross estate will include the value of all property to the extent of your interest in it at the time of death.

State Death Tax Credit

Under current tax law, the state death-tax credit is eliminated for those dying in 2005 through 2009 and replaced with an unlimited state death-tax deduction.

Exemption

While the estate tax remains in effect (until it's repealed in 2010), most married couples will want to take advantage of both the estate-tax exemption and the unlimited marital deduction. This will reduce the federal estate tax to zero for the estate of the first spouse to die.

Marital Trust

By placing property in a special marital trust, you can arrange for you spouse to receive a lifetime income interest in certain property. After your spouse dies, the property will be passed on to whomever you have named in the trust document.

Gift Exemption

To make a gift exempt from taxes, you must make the payment directly to the medical or educational institution providing the service.

Reduce Taxable Estate

You can reduce your taxable estate substantially through a planned annual program of $11,000 (or $22,000 if you're married) gifts. All gifts within the exclusion limits are exempt from federal estate taxes.

Form 709

Form 709 is used to report transfers subject to the federal gift tax and to compute the tax, if any, due on such transfers. A married couple can't file a joint Form 709, even if the spouses elect gift splitting. Instead, both the donor spouse and the consenting spouse must each file a separate gift tax return unless certain conditions are met.