How Does Your Will Effect Estate or Inheritance Tax?

Estate tax is a federal or state tax on the value of your estate that exceeds a certain amount (the exclusion amount). This is assessed against and paid from the estate of the decent. Inheritance tax is a state tax on the amount that your receive from an estate. There is no federal inheritance tax. Georgia does not have estate or inheritance taxes.  However, the federal estate tax is still applicable.  In 2010 and 2011, the estate tax exemption amount for a single testator is $5 million or $10 million for spouses.  There are also new provisions in place to allow one spouse to use the unused estate tax exemption of the other spouse.  So it is possible for an individual to have an exclusion amount of $10 million.  It is also important to not that you can pass an unlimited amount to your spouse at death without tax.  Warren Buffet could pass his entire estate to his wife without paying estate tax.  However, when she passes away, she will incur taxes on the value of the estate above available exemptions.  Sophisticated estate planning procedure can assist in allocating funds into complex entity or trust relationships to minimize the amount of tax owed.

As we have seen over the past few years, the estate tax law is always changing. You should re-look at your estate plan routinely in order to make sure it achieves your intent.

Jason M. Gordon


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