A Look At Gift/Estate Tax Exemption

One of the reasons why it is advisable to retain the services of an experienced estate planning attorney is to guide you in a manner that enables you to gain tax efficiency. The reality is that your legacy can be severely eroded by the estate tax, and every penny that is absorbed by the government is money that would have otherwise wound up in the pockets of those that you love.

How severe is this erosion? At the present time, the rate of the estate tax is 35%, so the government will take over a third of the taxable portion of your legacy. At the moment the estate tax exclusion is $5 million, so that taxable portion would be any resources that you may have that exceed $5 million in total value.

You may think that one option that is available to you would be to give your heirs some of their inheritances why you are still alive as gifts that would not be subject to the estate tax. This makes sense, but the powers that be do not want you to do this so there is a gift tax in place with the same 35% rate.

You may hear that there is a gift tax exemption of $5 million that allows you to give gifts totaling this amount throughout your life free of the gift tax. This is in fact true, but, the lifetime gift tax exemption is unified with the estate tax exclusion. So you do not have a $5 million gift tax exemption as well as a $5 million estate tax cushion. Because the two are unified, the total exemption available to you for both gift giving and the transfer of your assets after you pass away is $5 million.

There are tax efficiency strategies that can be utilized to manage your assets in an optimal manner in spite of this relatively low unified exemption. To explore your options, call Purcell & Amen, L.L.C. at (314) 966-8077 for a free consultation with an experienced estate planning attorney.

Experienced estate planning attorneys St. Louis MO of the Purcell & Amen LLC offers estate planning and business planning resources to residents of St. Louis MO. To learn more about these free resources, please visit http://www.yourestatematters.com/ today.