The estate tax is tax on property that transfers to others upon your death. Estate taxes are due on the total value of the estate: home, stocks, bonds, life insurance and any other assets you own. This is also referred to as the “death tax”. The estate tax was first enacted with the Stamp Act of 1797 to help pay for naval re-armaments and after several repeals and re-reinstatement, the Revenue Act of 1917 put the current estate tax in place. Despite its long history, this tax still remains quite controversial. The IRS calculates your required estate tax by adding the value of your assets and subtracting any applicable exemptions.
So, what’s the most common applicable exemption? It’s called the “Unlimited Marital Deduction”. The government exempts all transfers of wealth between husband and wife from federal estate and gift tax, regardless of the size of the estate. The surviving spouse must be an US citizen to qualify for this exemption. Of course, when the surviving spouse dies, the estate will be subject to estate taxes.
I’d recommend having an holistic review of your retirement portfolio with a financial planner that specializes in retirement planning. Plan now to have a lifetime stream of income that you can never out live.
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