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Estate planning a powerful tool for married couples

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Estate planning a powerful tool for married couples -

Like much of the economy-the talk of fiscal cliffs and all there is uncertainty about taxes in 2013. I wanted know about a planning strategy in the allotted time.

marital deduction (IRC sections 2056 and 2523) eliminates both the federal estate and gift tax on transfers of property between husband and wife, in fact treating them as a single economic unit. The amount of goods that can be transferred between them is unlimited, which means that the spouse may transfer all his property to the other spouse, during life or at death, and completely escape any federal estate or donation on the first transfer. However, the property transferred beyond the unified credit equivalent will ultimately be subject to the estate tax in the estate of the surviving spouse.

Through the use of the unlimited marital deduction, the combined assets of a married couple are not affected by the federal tax succession, which means that the total amount available for the support of the surviving spouse and maintenance after the death of the first spouse. On the death of the surviving spouse, the marital deduction may not be available, which means that the total value of the remainder of the estate of the surviving spouse will be exposed to the federal estate tax.

The Tax Relief Act 2010, however, provides for "portability" of the tax unified credit maximum inheritance between spouses. This means that the surviving spouse can choose to take advantage of any unused portion of the tax unified credit inheritance of a spouse who dies in 2011 or 2012 (the equivalent of $ 5 million in 2011). Consequently, with this election and prudent estate planning, married couples can effectively protect up to $ 10 million from the federal estate and gift tax-free use of the marital deduction planning techniques, but only if one spouse dies in 2011 or 2012. transferred beyond the $ 10 million unified credit equivalent combination will be subject to estate tax in the estate of the surviving spouse. (You may want to consider life insurance to pay the bill of tax due when the spouse dies.)

If the surviving spouse is predeceased by more than one spouse, the amount additional exclusion available for use by the surviving spouse is the lesser of $ 5 million, or unused exclusion of the last deceased spouse

IMPORTANT :. Since the 2010 Tax Relief Act "sunset" at the end of 2012, the portability of the unified credit exemption between spouses will not be available from 2013 if Congress takes action in the future.

If you want more information on how to make the most of the marital deduction, please contact your financial advisor or agent.

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