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Estate Planning Benefits & Special Tax Issues: Overview & Strategies for Optimal Wealth Management

Discover the benefits of estate planning, including methods to fully utilize unified credits, estate tax exclusions, and special valuation considerations. Explore complex tax issues and strategies for maximizing wealth transfer efficiency.

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Estate Planning Benefits & Special Tax Issues: Overview & Strategies for Optimal Wealth Management

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  1. Theodore A. Feitshans Department of Agricultural & Resource Economics North Carolina State University Unit 8, part 3Special Tax Issues in Estate Planning

  2. Benefits of a will: Unified Credit • Fully use credit of first spouse to die by placing credit amount in a testamentary trust, income to spouse, remainder to children • Second spouse also fully uses credit amount • Unified credit times two passes to children without any federal estate tax due

  3. Estate Tax Applicable Exclusion Amount

  4. Year Estate 2001 60%* 2002 50% 2003 49% 2004 48% 2005 47% 2006 46% 2007-09 45% 2010 Repealed 2011+ 60%* *10,000,000 - 17,184,000, 55% on excess Gift 60%* 50% 49% 48% 47% 46% 45% 35% 60%* (5% surtax) Maximum Estate & Gift Tax Rates

  5. Complex Issues • Forms of business organization • Minority/alienation discounts • Special use valuation • Qualified Family Owned Business Interest (repealed) • Installment payment of federal estate taxes • Qualified conservation easement exclusion

  6. Special Use Valuation (Code Sec. 2032A) • Reduce valuation of qualifying real property by up to $850,000 for deaths occurring in 2004 (indexed) • Recapture if property ceases to qualify • Reduces stepped up basis

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