One of the benefits of an estate plan is the ability to grant your assets in a way that won't subject your loved ones to estate taxes after you die. The estate tax is a tax on your right to transfer property at your death. The tax is levied on the value of the assets—including your house, financial accounts, retirement plans, business interests, and personal property, such as art and jewelry—that you leave behind when you die. The total of all of these items is your "Gross Estate."
Next, certain deductions are made to your "Gross Estate" such as mortgages and other debts, estate administration expenses, property that passes to surviving spouses, and qualified charities. If an individual's total estate is less than $5,340,000 ($10,680,000 for couples), it is exempt from federal taxes. However, anything over $5,340,000 will be subject to federal estate taxes. Fortunately, a husband and wife can leave an unlimited amount of money or property to each other without it being subject to the estate tax—but taxes may be owed when the surviving spouse dies, if the estate is large enough.
Federal estate tax laws can change from year to year; therefore, it is best to consult with an attorney while creating your estate plan. Contact Atlantis Law today to schedule a free consultation to speak to an experienced estate planning attorney.