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Tax Tips: Have You Reviewed Your Estate Plan Lately?

Nila Rakhit, CPA

Have you reviewed your estate plan lately?

As the rules currently stand, up to $3.5 million of an estate's value is exempt from federal estate tax for deaths occurring in 2009. In 2010, the estate tax is scheduled to disappear completely, but just for one year. In 2011, the tax will return with a lower $1,000,000 exemption.

Congress has made it clear that they will not let the estate tax expire even for one year, but the details of what the new exemption amount and tax rates will be have yet to be worked out.

In the meantime, a bit of planning can put you in a tax-saving position no matter what Congress finally decides to do.

Some strategies to consider:

* Many married couples have wills that leave everything to the surviving spouse. This can work well for some people. For others it can mean sizable and unnecessary estate taxes when the second spouse dies. Some simple planning moves can often shield the estate of the second spouse to die from taxation.

* Using the annual gift tax exclusion of $13,000 per recipient can reduce the size of your estate. If your spouse joins in the giving, you can transfer up to $26,000 to any number of recipients during the year.

* Generally, if you own a life insurance policy, the proceeds are subject to tax as part of your estate. Establishing an irrevocable life insurance trust to own the policy can shelter the proceeds from estate tax.

The larger your estate, the more essential planning for taxes will be. Remember, money saved is money earned.

We hope our tax tips have benefited you in your tax planning over the past year.  We would like to help you maximize your tax savings.Give us a call at 617-678-4021 for tax-cutters suited to your specific situation.

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