| Alan R. Horvath, Attorney at Law |
| Estate Tax Avoidance |
Both the state and federal governments impose a tax on the estate of a deceased individual. However, there is an
exclusion amount below which no tax applies. The exclusion is currently $2 million, however this figure has been in a
state of rapid flux. As recently as 1997, the figure was as low as $600,000. In 2009 it is presently set to go up to $3.5
million.
Regardless of the exact figure in the year of death, the theory remains the same. A married couple represents two
people, and can therefore potentially take advantage of two estate tax exclusions. However, in order to do so, the
amount excluded at the time of the first death, may not remain the property of the surviving spouse. By putting it in
trust instead of leaving it to the surviving spouse, it is possible to shelter funds using the exclusion at the first death,
still make the money available to the surviving spouse, but not have it considered for estate taxes at the second death.
Example.
At current exclusion levels, this is an issue that is relevant only to fairly large joint estates. Also note that the
downside of taking advantage of this approach is that the surviving spouse may not have complete access to the
funds thus sheltered.
exclusion amount below which no tax applies. The exclusion is currently $2 million, however this figure has been in a
state of rapid flux. As recently as 1997, the figure was as low as $600,000. In 2009 it is presently set to go up to $3.5
million.
Regardless of the exact figure in the year of death, the theory remains the same. A married couple represents two
people, and can therefore potentially take advantage of two estate tax exclusions. However, in order to do so, the
amount excluded at the time of the first death, may not remain the property of the surviving spouse. By putting it in
trust instead of leaving it to the surviving spouse, it is possible to shelter funds using the exclusion at the first death,
still make the money available to the surviving spouse, but not have it considered for estate taxes at the second death.
Example.
At current exclusion levels, this is an issue that is relevant only to fairly large joint estates. Also note that the
downside of taking advantage of this approach is that the surviving spouse may not have complete access to the
funds thus sheltered.
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P.O. Box 81
37 Main St., Suite 202
San Andreas, CA 95249
37 Main St., Suite 202
San Andreas, CA 95249
| Phone: 209 754-5291 Fax: 209 754-5293 |
| ahorvathlaw@sbcglobal.net |
| Estate Planning By Phone for Any California Resident |