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Avoiding Estate Tax

The terms estate taxes, death taxes and inheritance taxes are often used interchangeably. These are taxes levied by government agencies. They have nothing to do with probate. The IRS doesn’t actually collect estate taxes from most families, because their estates are too small. Big estates can often avoid actually paying an estate tax by simply using the legal tools a lawyer has available for advanced estate planning. Estate taxes are often called voluntary taxes, because if you plan for them you don’t have to pay them.The rich protect themselves, so when a family member dies, they don’t pay any estate taxes. Why shouldn’t you protect yourself?

Technically, every dime of a deceased person’s estate is subjected to the estate tax, and a tax is actually imposed. Families usually don’t have to actually pay any estate tax, because the IRS gives everyone a "credit" which can be used to offset the estate tax assessed against the estate. The amount of property an estate can pass, without having an estate tax actually paid, changes almost annually. The estate tax brackets and the rates within each estate tax bracket don’t change. It is actually the credit amount that changes.

In the IRS code, the gift tax and estate tax are "unified", thus the credit is called the "unified credit". Gift tax and estate tax liabilities, or a combination of the two tax liabilities, can be offset by the amount of the unified credit. When you want to know what the unified credit amount actually is, you will have to look it up, because it changes too often to make any assumptions. The amount of property that generates an estate tax equivalent to the amount of unified credit available to offset the estate tax is called the "exemption equivalent". When people say that you can pass one million dollars without an estate tax they are really saying that the unified credit at that time is the amount of credit needed to offset the tax imposed on the first one million dollars in estate value.

An individual can have a taxable estate and still be struggling day to day, because the estate includes the house, stocks, bonds, all the other real estate, the 401(k), IRAs, the little business, the life insurance face values, all of the personal collectables, and every other asset you can think of. Life insurance is included in most cases, even though people have been told that their life insurance isn’t "taxable ". There isn’t any income tax, but there certainly is an estate tax on life insurance. Many families can’t believe they will actually have to pay estate taxes after dad dies. Dad didn’t get any "richer", inflation simply grew his estate value above the exemption equivalent amount. On the first dollar above the exemption equivalent, the estate tax is about 50%, and the family will actually pay the tax. So, an estate that is only a half a million dollars above the exemption equivalent can generate a payable estate tax of almost a quarter of a million dollars. Attorneys aren’t cheap, but getting an extra $250,000 to your family makes their motley $10,000 bill look like a great deal.

When you use Lee R. Phillips’ FREE DVD, Using the Law to Make Money and Protect Your Assets, with his award winning book, Guaranteed Millionaire, you will learn how to remove your life insurance from any estate tax exposure. Using the book and DVD together, a couple can learn how to pass twice as much property to their family without having any estate tax problem. Numerous options are available to you if you can’t eliminate estate taxes by simply getting your life insurance out of your estate and passing twice the exclusion equivalent to your family. The FREE DVD and book go through LLCs, Family Limited Partnerships, Corporations, and other legal estate planning tools you can use for asset protection and estate tax elimination. Eliminate estate taxes and get more asset protection by simply ordering Guaranteed Millionaire plus the FREE DVD, Using the Law to Make Money and Protect Your Assets.

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