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.       Remember...   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.   Who can use the Federal estate tax Coupon?   A married couple An unmarried couple A single person   How can you use the Federal estate tax Coupon?   You must leave specific instructions at your death in your will or Revocable Living Trust.   What are the PAYOFFS of using the Coupon?   The Coupon pays the Federal estate tax up to the Coupon amount. No money out of your pocket to pay the Federal estate taxes.   How to LOSE your Coupon?   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.   What are the real costs of WASTING your Coupon?   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.       Year of Death Amount of "Coupon"                       2002 -- 2003 $ 1,000,000                       2004 -- 2005 $ 1,500,000                       2006 -- 2008 $ 2,000,000                       2009 $ 3,500,000                       2010 Estate and Gift Tax is Repealed                       2011 and after $ 1,000,000                                                     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 to find out how to save that money for your family.                 Return to the list of Estate Planning topics. Printer Friendly Version