Estate Planning

Howard J. Alpern
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Dan D. Stuart
(719) 471-7955
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Kenneth P. Myers
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Virjinia (“Jina”) V. Koultchitzka
(719) 471-7958
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Estate Planning

Estate planning is the process of anticipating and arranging for the disposal of an estate during a person's life. Estate planning typically attempts to eliminate uncertainties over the administration of a probate and maximize the value of the estate by reducing taxes and other expenses. However, the ultimate goal of estate plan is determined by the specific goals of the client and may be as simple or complex as the client's needs dictate. Guardians are often designated for minor children and beneficiaries in incapacity.

Good Estate Planning Can Help You Reduce Your Tax Burden

The Estate Tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death. The fair market value of these items is used, not necessarily what you paid for them or what their values were when you acquired them. The total of all of these items is your "Gross Estate." The includible property may consist of cash and securities, real estate, insurance, trusts, annuities, business interests and other assets.

Once you have accounted for the Gross Estate, certain deductions (and in special circumstances, reductions to value) are allowed in arriving at your "Taxable Estate." These deductions may include mortgages and other debts, estate administration expenses, property that passes to surviving spouses and qualified charities. The value of some operating business interests or farms may be reduced for estates that qualify.

After the net amount is computed, the value of lifetime taxable gifts (beginning with gifts made in 1977) is added to this number and the tax is computed. The tax is then reduced by the available unified credit.

Most relatively simple estates (cash, publicly traded securities, small amounts of other easily valued assets, and no special deductions or elections, or jointly held property) do not require the filing of an estate tax return. A filing is required for estates with combined gross assets and prior taxable gifts exceeding $1,500,000 in 2004 - 2005; $2,000,000 in 2006 - 2008; $3,500,000 for decedents dying in 2009; and $5,000,000 or more for decedent's dying in 2010 and 2011 (note: there are special rules for decedents dying in 2010); $5,120,000 in 2012, $5,250,000 in 2013, $5,340,000 in 2014 and $5,430,000 in 2015.

Beginning January 1, 2011, estates of decedents survived by a spouse may elect to pass any of the decedent’s unused exemption to the surviving spouse. This election is made on a timely filed estate tax return for the decedent with a surviving spouse. Note that simplified valuation provisions apply for those estates without a filing requirement absent the portability election. [source: Internal Revenue Service]

Frequently Asked Questions on Estate Taxes

Below are some of the more common questions asked about Estate Tax issues. Please contact one our experienced Estate Planning attorneys for more information. The best time to develop a plan for your estate is eight now!

  • When can I expect the Estate Tax Closing Letter?
  • For estate tax returns filed before June 1, 2015
  • What is included in the Estate?
  • I own a 1/2 interest in a farm (or building or business) with my brother (sister, friend, other). What is included?
  • What is excluded from the Estate?
  • What deductions are available to reduce the Estate Tax?
  • What other information do I need to include with the return?
  • What is "Fair Market Value?"
  • What about the value of my family business/farm?
  • What if I do not have everything ready for filing by the due date?
  • Who should I hire to represent me and prepare and file the return?
  • Do I have to talk to the IRS during an examination?
  • What if I disagree with the examination proposals?
  • What happens if I sell property that I have inherited?
  • Will my same-sex spouse be considered a surviving spouse for purposes of the marital deduction for estate tax purposes?

 


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