CFP

Deferral And Minimization Of Estate Taxes - Exclusion of Property from the Gross Estate

Exclusion of Property from the Gross Estate
As we learned from previous lessons, the gross estate is the total fair market value (FMV) of all interests and property held or owned by the decedent at the time of their death. In order to avoid potential estate tax liability, individuals can employ several different techniques to reduce the size of their gross estate. They include some of the following methods:

Estate Reduction Techniques:

1) Transfer Life Insurance Ownership – Life insurance proceeds can be removed from the potential gross estate by transferring ownership to someone other than yourself.

2) Retitle Assets Transfer or retitle assets to the name of your spouse or another individual.

3) Irrevocable Trusts Irrevocable trust transfers are a completed gift. Revocable trusts are not completed transfers because the donor has retained the power to demand return of the trust property.

4) Life Insurance Life insurance can be purchased in an amount equivalent to pay the estimated estate taxes are expected to incur.

Be aware of the Three-Year Rule:

In section 2035 of the United States Tax Code, assets transferred or retitled within three years of your death will be (in most every case) brought back for inclusion in the gross estate of the decedent if they die with three years of the transfer.





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