Through tools such as a Unified Tax Credit
, Irrevocable Trusts, and Charitable Remainder Trusts, you have more control over asset distribution and can potentially reduce taxes.
The federal unified tax credit
is a dollar amount (currently $345,800), which can be used to offset or pay the estate tax liability on a decedent's estate that is imposed by the federal estate tax law.
Estate planning documents drafted prior to the new law should be reviewed; wills and trusts referencing the unified tax credit
may have an unintended result, not distributing assets in accordance with the decedent's intent.
During the 10-year period when the death tax is phased down and repealed, significant relief will be provided through death tax rate reductions as well as through future increases in the unified tax credit
Gifts covered by the annual exclusion do not reduce a donor's $675,000 unified tax credit
Under current law, estates subject to death tax are eligible for a unified tax credit
of up to $675,000; the exemption is scheduled to increase, to $1 million by 2006.
5 million minus the unified tax credit
on the first $600,000.
These transfers exhausted nearly all of her unified tax credit
During the nine-year period when the death tax is phased down and repealed, significant relief will be provided through death tax rate reductions as well as through future increases in the unified tax credit
Once an estate is valued, a disclaimer or partial qualified terminable interest property (QTIP) election may facilitate using the decedent's unified tax credit
or fine-tuning the marital deduction.
Second, the $202,050 unified tax credit
shelters a greater portion of M's estate (the smaller estate) from taxes (the credit rises to $211,300 in 1999, eventually rising to $345,800 by 2006).
The gifts did not result in any gift tax payable, but used a portion of T's unified tax credit