That is why estate planning, with an eye especially on taxes, can be rewarding. Planning Pays Off Planning particularly pays off for the steadily mushrooming number of individuals who have moved out of the middle class and into near-millionaire status as housing values have climbed and as soaring financial markets have swelled amounts invested in stocks and such retirement arrangements as IRAs. Your potential estate may be much larger than you realize, not just because of long-term appreciation of homes and other properties, but also because of the way the IRS calculates your taxable state. Moreover, be mindful of the possibility that your continual growing estate might eventually exceed even the exemptions and deductions authorized by current law. Recent Law Changes Recent law changes gradually increase the amount of assets exempt from estwte and gift taxes.
All estates get the benefit of the exemptions, depending on the date of death.
The net taxable estate is IRS jargon for what is left after all of your assets, such as stocks and real estate, are offset by deductions for debts, funeral expenses, administrative outlays for executor's and attorney's fees, and similar charges, as well as for gifts to charities and generally without counting any property left to a surviving spouse. Uncle Sam treats a husband and wife as, in effect, a single economic unit and generally allows unlimited transfers of property from one spouse to another, undiminished by gift or estate taxes. No estate tax on the death of a married person, no matter how sizable the state, provided all assets in excess of the exemption amount are left to a surviving spouse who is a U.S. citizen. Uncle Sam will step in to collect taxes on the value of the estate's assets in excess of the exemption, unless the survivor has remarried and the marital deduction is available. Still, all is not lost.