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In 2016, the federal estate tax exemption is $5.45 million – which means you can give away that much to your heirs (counting both lifetime gifts and bequests in your will) without paying any gift or estate tax.
So, these strategies might make sense for you if:
- Your net worth is more than that amount, or might potentially be more than that amount by the time you pass away.
- You live in a state that imposes state estate, gift, or inheritance taxes (which tend to kick in at much lower amounts).
- You think Congress might eventually try to raise revenue by lowering the estate tax exemption – remember, the exemption was only $675,000 back when the previous President took office!
The advantage of using these techniques now is that if both tax rates and interest rates go up, you’ll have locked in the benefits of today’s low interest rates.
Should you need any further information, please do not hesitate to contact us.