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What is the unified tax credit all about?
Every American gets an automatic unified tax credit against federal Estate and Gift taxes of $780,800 in 2006--2008 which is equivalent to transferring $2 million tax-free to your heirs. And, if you are married, your spouse (also a U.S. citizen) has the same exemption credit, so that you can, as a couple, give a full $4 million to your heirs free of Estate Tax. The exemption levels increase to $3,500,000 in 2009. Though the estate tax is repealed for 2010, it is resurrected in 2011 and the estate tax exemption will be $1,000,000. While the federal estate tax is increased in stages and repealed, the gift tax is fixed at $1,000,000 and remains in existence in 2010, the year of the repeal of the federal estate tax.
This credit is referred to as the "unified" credit because federal Gift and Estate Taxation are integrated into one unified tax system. There is no Estate Tax on the first $2 million for the years 2006-2008 of your combined taxable gifts and transfers at death. You ante up when the sum reaches over $2 million starting January 2006. |
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Tax Attorneys
Tax Law Forum |
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A small word about farm and closely held business property
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I have a large term-life policy in which my sister and brother-in-law are sole beneficiaries. On my behalf, they are paying the annual premium. Are there any tax consequences if they remain (1) beneficiaries or (2) joint owners of the policy? Is it necessary to inform the insurance company that my beneficiaries are paying the premium?
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