Important Estate Tax Figure for 2016

For 2016, the federal estate tax exemption has increased to $5.45 million per individual, up from $5.43 million in 2015.

The estate tax is a tax on the value of your estate which exceeds the estate tax exemption. Your estate consists of the fair market value of everything you own or have interest in at the time of your death. The total of all of these items is your “Gross estate.” Once your Gross estate is accounted for, certain deductions are allowed and thus your “taxable estate” is determined.

After the net amount is computed, the value of lifetime taxable gifts (beginning with gifts made in 1977) is added to this number and the tax is computed. The tax is then reduced by the available unified credit.

Many relatively simple estates do not require the filing of an estate tax return, however you should consult with an estate attorney. A filing is required for estates with combined gross assets and prior taxable gifts exceeding $5.45 for 2016.

 

 

Estate planning is a highly complex area of law. If you are interested in creating a trust for your family business or have any questions regarding your current estate plan, please contact the experienced estate planning attorneys at Lonich Patton Ehrlich Policastri for further information. The attorneys at Lonich Patton Ehrlich Policastri have decades of experience handling complex estate planning matters, including family business trusts, and we are happy to offer you a free consultation. Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results.  While this post may detail general legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship.

Sources:

IRS 2016 tax: https://www.irs.gov/pub/irs-drop/rp-15-53.pdf

https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Whats-New-Estate-and-Gift-Tax

https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Estate-Tax