What is Estate Planning?
•The process of planning for the
–Accumulation
–Conservation
–Distribution of someone’s wealth
Three Objectives of Estate Planning:
1.Lifetime objectives
•Pre-retirements needs
•Funding children’s education
•Having a contingency plan in case of incapacity
•Having adequate income for retirement
2.Post-death objectives
•Who is going to benefit from his or her asset
•How to pass the assets in the most cost-effective manner
•When should the asset pass
3.Tax planning
objectives
•Using various of tax deduction methods
•Qualified plans, education expense deductions, student loan interest deduction, child tax credit,
etc.
•Transferring as much of the estate with the least amount taxes and costs
•Estate tax (due nine months after one’s death), GST, probate cost and executor fees
What Asset will be Included in Decedent’s Estate?
1.Property owned at death
2.Life insurance
3.Annuity
4.Transfers made within 3 years of death
The Transferring Tax System Unlimited Marital deduction:
•Estate Tax
•Gift Tax
•Generation Skip Tax
| Year | Exemption | Highest Estate and Gift Tax |
| 2004 | $1 Million | 48% |
| 2005 | $ 1.5 Million | 47% |
| 2006 | $ 2 million | 46% |
| 2007 | $ 2 Million | 45% |
| 2008 | $ 2 Million | 45% |
| 2009 | $ 3.5 Million | 45% |
| 2010 | Repealed | 35% |
| 2011 | $ 5 Million | 35% |
| 2012 | $ 5.12 Million | 35% |
| 2013 | $ 5.25 Million | 40% |
| 2014 | $ 5.34Million | 40% |