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Estate taxes can be avoided

As one enters into the process of estate planning in North Canton, they might be under the assumption that whatever amount of assets they have to pass on to their heirs will automatically be limited by an estate tax liability. It may be easy to assume that taxes will come into play during the estate administration process; there are typically tax considerations with any significant transfer of funds or property. Yet estate taxes may be something that too many dedicate too much concern to. 

Why? According to information shared by the Internal Revenue Service, it is projected that only 31,700 estate tax returns will be filed in 2019. That represents just over one percent of the 252,864,700 that it is projected to receive. One might think that given that is roughly in line with the estimated mortality rate in the U.S., that sounds about right. Yet many of those returns are not filed for the purpose of paying estate taxes. Rather, they are being submitted by surviving spouses electing portability. 

What is portability? The federal government allows for an estate tax exemption. The IRS shows that for 2019, the threshold to qualify for this exemption is $11.4 million. Thus, those estates whose total taxable value is less than that amount will not be subject to tax. With proper planning, married couples can combine their exemption amounts to exempt $22.8 million. One can utilize the unlimited marital deduction to gift the entire value of their estate to their spouse upon their death. The surviving spouse then combines their exemption amounts through portability. This intention must be stated by filing an estate tax electing portability the same year that decedent dies.