Estate planning\u00a0affects women more profoundly, so they should take charge of this process, or\u00a0at least be equal participants. Among Americans 65 and older, 42% of women, but\u00a0just 14% of men, are widowed. Women’s longer life expectancy, combined with\u00a0 their tendency to marry older mates and their lower lifetime earnings means\u00a0they are far more likely to see their living standards compromised in\u00a0retirement if proper estate planning is not done. And since it is women who are\u00a0most often widowed, they usually have the last word about which of a couple’s\u00a0assets ultimately go to family, charity or the taxman.<\/p>\n
Starting in 2011,\u00a0a surviving spouse can add any unused estate tax exclusion of the just deceased\u00a0spouse to her own $5 million exclusion–this is called portability. So a widow\u00a0can pass on as much as $10 million, untaxed, through either lifetime gifts or\u00a0her will. But portability is not automatic. To get it, the executor of the\u00a0estate of the first spouse to die must file an estate tax return, even if no tax\u00a0is due. Surviving spouses should see to it that the form is filed even if they\u00a0have nowhere near $5 million of their own, because who knows what the future\u00a0holds?<\/p>\n
Nine months is\u00a0also the deadline if you plan to disclaim (turn down) any portion of what you\u00a0inherited from a spouse so that it can go directly to your children or other\u00a0family members or into a trust for their benefit. The new tax law makes it more\u00a0likely that spouses will leave everything to each other outright. Other couples\u00a0may want to give the survivor the right to disclaim at least some money and\u00a0have it go into a family trust or bypass trust, as it is also called. This\u00a0allows the survivor to make an informed decision based on her own financial\u00a0resources and federal and state estate laws at that time. If you want to use\u00a0this postmortem tax planning strategy, you need to keep an eye on the calendar.<\/p>\n
Starting in 2011, the tax-free amounts you can give to\u00a0no-spousal heirs during life and at death are combined into a single $5 million\u00a0exclusion. So, for example, if you have used $1 million of the exclusion to\u00a0make lifetime gifts, the unused exclusion when you die will be $4 million,\u00a0rather than $5 million.<\/p>\n
Married couples get a new, special break: They can share\u00a0each partner’s $5 million exclusion during life (this process is called\u00a0gift-splitting) and give more to the kids now, tax-free. But of course this\u00a0also reduces how much of the tax-free amount will be available when they die,\u00a0either for their own use or to be carried over by the survivor.<\/p>\n
Should you give away assets now to save taxes?<\/p>\n
Now that the estate tax exclusion has gone to $5 million per\u00a0person ($10 million\/couple), this issue concerns very few people. Still, a\u00a0popular new refrain from estate tax experts is that you should rush to give to\u00a0family members before the tax-free amount is scheduled to drop to a measly $1\u00a0million in 2012–even though that change isn’t likely to take effect. Of course\u00a0many of the transactions they recommend for making gifts now generate high\u00a0legal fees for them.<\/p>\n
Keep in mind, too, that most methods of saving estate taxes\u00a0require you to totally give up ownership and control over assets, whether you\u00a0are giving them to people directly or putting them in a trust. A threshold\u00a0question for anyone contemplating this strategy: Can I afford it? Be sure you\u00a0are leaving yourself enough, and to be on the safe side, you should assume you\u00a0will live to an advanced age.<\/p>\n
You can give anyone $13,000 a year (a couple can give\u00a0$26,000) without eating into your $5 million exclusion. If you want to give\u00a0away more than that, you can either count your gift against the $5 million\u00a0exclusion amount or, if you have used up the tax-free amount, pay gift tax of\u00a035%. Remember that each dollar of the exclusion used during life shaves a\u00a0dollar off what is available for your estate to use after your death.<\/p>\n","protected":false},"excerpt":{"rendered":"
Estate planning\u00a0affects women more profoundly, so they should take charge of this process, or\u00a0at least be equal participants. Among Americans 65 and older, 42% of women, but\u00a0just 14% of men, are widowed. Women’s longer life expectancy, combined with\u00a0 their tendency to marry older mates and their lower lifetime earnings means\u00a0they are far more likely to […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_daextam_enable_autolinks":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[11],"tags":[],"class_list":["post-1270","post","type-post","status-publish","format-standard","hentry","category-general-estate-planning-and-probate"],"_links":{"self":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts\/1270","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/comments?post=1270"}],"version-history":[{"count":0,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts\/1270\/revisions"}],"wp:attachment":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/media?parent=1270"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/categories?post=1270"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/tags?post=1270"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}