Estate Tax-Federal Estate Tax

We pay taxes, based on income each and every working years of our lives, but according to Uncle Sam that’s not enough, so we pay taxes on death too. As far as taxes go, the estate tax has always been one of the least accepted forms of taxation. It is a serious revenue generator for the coffers of the US government. There has been much talk in recent years about the repeal of the estate tax, in order to do so we will have to find revenue for another tax source to replace the estate tax. This is easier said than done, so we wait. And we may be waiting for a long time, as there doesn’t seem to be a clear solution.

The estate tax is often referred to as the double tax, as it is a second tax. Essentially the estate tax is a form of double taxation, since it’s taxing money that really has already been taxed. Though it may not seem fair, it’s currently the way it is. The good news is that there are ways to avoid this estate tax, regardless of your tax rate. For the rich, the estate tax is not referred to as the double tax, but rather the volunteer tax. For these individuals who might be classified in the highest tax rate, are often well aware, when it comes to avoiding the estate tax.

All too often, it’s the middle class who aren’t well-versed in estate planning, and that end up footing the estate tax bill. This is common for even those that may be in a lower tax rate. All they need is a little bit of knowledge, and they too can eliminate the estate tax. To touch on a few of the techniques that the ultra rich utilize to avoid the estate tax, they often use rather mundane estate planning practices. This process doesn’t have to be a complicated one. The simplest step to reducing your taxable estate is gifting. You can eliminate large amounts of your estate by simply gifting. Current law allows for a rather large amount of money to be gifted, per individual. So, by gifting to family or predetermined beneficiary such as a charity you can start reducing your estate. And the beauty of gifting is that there is no limit on how many individuals you can give to. Why wait till you die to tax your estate when you can gift it to the same beneficiaries free from the estate tax.

The other popular method to reduce estate taxes is life insurance planning. Life insurance policies are utilized by the rich to find any estate tax bill that may be incurred by future generations. Life insurance can provide a large amount of leverage with a rather small initial outlay. A large estate, with potentially large estate tax consequences can be covered with a rather small life insurance premium. And because life insurance proceeds are not taxable, the life insurance payout is completely free of tax, when set up properly. This is why life insurance has been an integral part of estate planning for years. In fact, life insurance planning is worth taking a closer look at for your estate planning needs. This is not just exclusive to avoiding the estate tax. The synergistic effect, along with the tax advantage of life insurance, makes it an excellent tool for the transfer of wealth.



By: Mike Trudeau

About the Author:

Guy Drones

I bet you probably didn’t know that your heirs might have to liquidate ( sell off ) your home or commercial/residential rental properties immediately after your death. This is unless you create an Irrevocable Life Insurance Trust or ILIT.

Most people have the expectation of passing on their wealth to their children or spouse. With the demise of the baby boom generation approaching there will be an enormous transfer of wealth, the government plans to capture some of that wealth with the estate tax. The estate tax is imposed upon death.

As of now if your assets net worth is less than $1.5 million dollars your exempt from the Federal estate tax. For married couples, their exempt up to $3 million dollars. Unfortunately, any amount over the exemption will be taxed under the Federal Estate Tax, which is usually around 45%. This tax must be paid within nine months of the day of your death.

Since few estates hold enough cash to pay for the estate tax, you will be forced to start selling off assets to raise enough money to pay the estate tax on time. The time restraints can sometimes cause people to rush into unfavorable transactions.

Fortunately though, you can use an Irrevocable Life Insurance Trust ( ILIT ) to reduce or eliminate your estate tax cost. ILIT’s can be used to generate enormous amounts of cash for your heirs, which you can use to pay the estate tax. When you purchase an ILIT the proceeds are not included in the estate of the insured. The proceeds are strictly for the decedent’s beneficiary, which completely avoids the estate tax. You get 100% of the money estate tax free.

Any ordinary life insurance policy is not the same as an Irrevocable Life Insurance Trust. An ILIT is estate tax free; a life insurance policy is taxed. This is because a life insurance policy is under the insured’s estate.



By: Nicholas Copernicus

About the Author:

Yong Jurries

It is almost impossible to avoid the IRS completely; even when you die, the IRS has their hand in your pocket. While many people try to sort out their various estate issues and tax problems by themselves it can get overwhelmingly frustrating and most people end up just using an estate tax attorney to sort out their IRS problems in Dallas.

There are a number of estate tax attorneys in Dallas that can help the living come up with solutions with regard to their final tax payments as well as those who are struggling with a Will or estate that is in probate and the IRS is demanding taxes from.

Although the IRS tax laws remain the same from state to state, estate tax laws differ. The estate tax laws in Dallas may be different than those in Chicago. If you move from state to state and have a living trust, which is a vehicle designed to eliminate or at least greatly reduce estate tax, it is important that you should try and get a new living trust made up in the state in which you live.

If you are in charge of an estate and have run into tax problems with the IRS regarding estate tax, you may be better off using the services of a tax attorney. You will find that some estate tax attorneys in Dallas will charge you a flat fee to take care of the tax problem whereas other tax attorneys will charge you by the hour. Whatever you do, avoid a tax attorney that will charge you by the hour. Dealing with the IRS can be very time consuming and may end up costing the estate thousands of dollars in legal fees. You are better off dealing with an estate tax attorney in Dallas who will charge you a flat fee to sort out all your estate problems.

Dealing with the IRS can be a headache even when everything is going well with your life. It is the last thing that you want to do when you are having problems or have gone through a loss like a death in the family. An estate tax attorney in Dallas can end up taking the burden of dealing with the estate tax off of your shoulders and dealing with it himself. You will not have to worry about phone calls and letters to the IRS as they can all come to and from the office of your attorney.

There are many times when you can deal with the IRS and tax issues yourself. When you have estate tax that is due on a Will or estate in which you are in charge, you should put the issue into the hands of a professional real estate attorney who is experienced in dealing with these matters and is up to date with the most recent laws regarding real estate. When you look for an estate tax attorney in Dallas, make sure that he or she has had plenty of experience in not only dealing with the IRS but also with estate planning. Once you find an attorney who you think is right for you, you can rest easier knowing that you are in good hands and no longer have the nightmare of having to deal with the IRS directly.



By: Seomul Evans

About the Author:

Toby Gasco