Calculating Estate Taxes & Reviewing Your Options
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The gross value of the estate: all assets that were owned by the individual, business interests, life insurance, household goods, personal property, real estate, promissory notes, cash accounts, market assests such as stocks, bonds, etc., partnership interests, and all jointly owned properties. Many times people feel that life insurance is not included in the gross estate, but the death value is included in the owner's estate. The beneficiary will recieve the death value income tax free. (It is usually best for each spouse to own the other's policy; this would exclude the death values from the gross estate of the one who may happen to die. If the owner of a life policy is a trust or charitable organization, it would be excluded from the gross estate.)
These are elements that can reduce the gross estate value for taxes: The decedent's funeral and administrative expenses, any debts of the estate, mortgages or liens; also, if a decedent had requested bequests for a charity or a surviving spouse, those would reduce the estate. (the surviving spouse deduction is unlimited, but it may not be your best choice as you look ahead, and the estate is faced with a double estate at the death of the surviving spouse.)
With proper planning today we can assist you in greatly reducing or eliminating most federal taxes and other estates taxes so that a senior is able leave a legacy for their family instead of a liability. When a decedent is a business owner, a review of using a life insurance trust to provide estate liquidity may be a successful option, thereby avoiding the aspect of having to sell a business to pay estate taxes. There are many trusts and other tools to assist a planner in reducing the client's possible estate taxes. A comprehensive review of your estate is necessary before we are able to assist you with what would be your best options to reduce estate taxes.
Calculating Estate taxes: