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Estate Planning: Estate Tax Planning |
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The Bailey Law Firm counsels high net worth individuals, couples and families on how to reduce their federal and state estate tax burden at death. |
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| What is the Estate Tax? |
The Estate, or Death Tax, is a tax collected at your death on ALL of your assets. For Estate Tax purposes, your assets include your house, your bank accounts, and your stocks and bonds, but also your life insurance policy death benefits and your retirement accounts.
Estate Tax Rates range from a low of 37% to a high of 46% (2006). |
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| Who pays the Estate Tax and When are Estate Taxes Due? |
Estate Taxes are paid from your assets at your death. After all debts and Estate Taxes are paid, your remaining assets are then distributed to your heirs or beneficiaries.
Estate Taxes are due and payable 9 months after the date of your death.
If your estate does not have sufficient liquid assets to pay the Estate Taxes when due, then your estate will be forced to: 1. Borrow the money to pay the tax; 2. Sell assets such as the family farm or business to pay the tax; or 3. ask the IRS for any extension to pay the tax, which may or may not be granted. |
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| Are any Assets Exempt from the Estate Tax? |
| The IRS gives each person an amount which is exempt from Estate Taxes, sometimes called the Credit Shelter Amount, the Exemption Equivalent or Exemption Amount. The Exemption Amount is the amount you can transfer to the next generation with NO Estate Tax. For 2006, the Exemption Amount is $2,000,000. |
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