Law Offices of Connie Yi, PC
California
Estate Planning
& Tax Law
Toll Free: 888-312-6978
Website Navigation Menu

Do estate taxes apply to me and can I avoid them? (2 of 2)

Welcome back. We are currently discussing methods of reducing or avoiding the federal estate tax, which applies to property that is passed to heirs upon death. The most important thing to point out is that estate taxes do not apply to everyone. In fact, 99.8 percent of estates are subject to the tax because of the high exemption that exists, according to the Center on Budget and Policy Priorities.

In 2015, the estate tax exemption is $5.43 million per person (or $10.86 million per married couple).

Of course, estate planning to reduce or avoid the estate tax is extremely important for those whom it applies to because it is a very expensive tax. Here are the remaining three most common approaches that can be taken to reduce or eliminate estate taxes, continued from our first post:

Creating a charitable trust

This kind of trust, which can be created by an experienced estate planning lawyer, involves making a large donation to a charity of your choice, so long as the charity is tax-exempt. The amount will not be considered as part of your estate upon your death.

Creating a life insurance trust

This kind of trust allows you to remove the value of life insurance proceeds from the sum of your estate. However, this depends entirely on who owns the life insurance policy at your death. Someone else has to own the policy in order for the amount to not be considered as part of your taxable estate.

Creating an AB trust or a “QTIP” trust

The AB trust involves spouses leaving their property to their children, but allowing for the surviving spouse to have access to the funds throughout his/her lifetime. The “QTIP” trust involves postponing estate taxes until after the second spouse has died.

However, with the personal exemption and spousal “portability” that exist at this time, most couples do not need either one of these trusts.

A lawyer can provide you with the answers you need

At this point, you may be unsure of whether your estate will be taxable upon your death. If this is the case, an experienced estate planning lawyer can go over all of your assets and determine if the federal estate tax will apply on your death. If it does, your lawyer can also go through ways of reducing or possibly avoiding the estate tax, perhaps using the strategies listed in these posts.

No Comments

Leave a comment
Comment Information

Contact Us Now to begin your initial consultation

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

FindLaw Network

Office Locations

Law Offices of Connie Yi, PC
490 Post Street, Suite 508
San Francisco, CA 94102
Phone: 415-433-3350
Toll Free: 888-312-6978
Map and Directions

Additional Office Locations:
Pleasanton
323 Ray Street
Pleasanton, CA 94566
Phone: 925-484-0888 
Pleasanton Law Office Map

San Mateo
1900 S. Norfolk Street, Suite 350
San Mateo, CA 94403
Phone: 415-433-3350
Map and Directions

Sunnyvale
1250 Oakmead Pkwy, Suite 210 
Sunnyvale, CA 94085 
Phone: 888-312-6978 
Map and Directions