How Much Can I Give or Pass Away With and Not Pay Federal Gift or Estate Taxes?
 

Generally, every U.S. citizen can (in 2005) leave up to $1,500,000 to any other U.S. citizen or entity without paying any Federal gift or estate taxes. This is what we call the "coupon" amount.  We use the example of a coupon to illustrate a complex estate planning topic and (hopefully) make it understandable.

We have all seen coupons at some point in our life.  Maybe we receive the coupons in our Sunday paper, maybe they come in the mail, or maybe we have to cut them off of the cereal box.  So ... let's talk about coupons.

What are the essentials of most coupons?  Most coupons...

• are an offer from the coupon sponsor to buy goods at participating stores
• have a face amount
• are free to the customer
• expire at some time
• are non-transferable
• may be used only by the customer
• have a specific process of redemption.
   

When you get the coupon, you ask yourself "Do I want this stuff?"  If yes, then you take the coupon to the store, select the coupon items, pay for them with the coupon, and go home happy.  Did you pay any money out of your pocket?  NO.  Did anyone stop you for shoplifting?  NO.

• You did not get free products.
• You got a free coupon.

• You paid for the products with the coupon.
   

Your Federal estate tax Coupon is the same thing.  The Federal estate tax Coupon...

• is an offer from Congress
• has a face amount of up to $1,500,000 (in 2005)
• is free to you, and every U.S. citizen
• expires at your death
• is non-transferable -- only you can use it
• must be redeemed within 9 months of your death.
   

• A married couple
• An unmarried couple
• A single person
   

• You must leave specific instructions at your death in your will or Revocable Living Trust.
   

• The Coupon pays the Federal estate tax up to the Coupon amount.
• No money out of your pocket to pay the Federal estate taxes.
   

• Jointly owned property between spouses.  Unfortunately, jointly owned property between spouses can ruin an otherwise good Coupon.  Property owned jointly between spouses does not give you the opportunity to use your Coupon.  It is already protected 100% from Federal gift or estate taxes by the marital deduction.  But, while joint ownership between spouses may save the property from taxation upon the first spouse's death, the property WILL BE included in the taxable estate of the surviving spouse.  This only defers estate taxes, it does nothing to save estate taxes.

• Beneficiary designations (IRA, 401(k), Life Insurance, etc.) between spouses. Unfortunately, the same thing happens as with jointly owned property between spouses. There is no opportunity to use your Coupon -- because of the unlimited marital deduction, and it does not save estate taxes -- it only defers it.
   

• To you, nothing -- you won't be around to see what happens.
   

• To your spouse, nothing -- as far as your spouse is concerned, the taxes on your estate are paid for by the marital deduction.
   

• To your family, PLENTY:
  • You could have saved thousands and thousands of dollars, if you had just planned properly
  • Instead, those savings were paid to the IRS as taxes.
     

The Coupon amount is scheduled to increase over the next several years.  The following is a table showing the increases.

The question is ... where do you want those savings to go? 
The IRS or YOUR FAMILY?

CALL US at 800-501-3220 or EMAIL US at lawyers@asherlawfirm.com to find out how to save that money for your family.

Call us for more information about the above, or other services which we may help you with.