Estates and Gifts

The estates and gifts area is one most taxpayers either (1) don't want to talk about, or (2) don't believe is applicable in their situations. We have seen many clients delay talking about the development of an estate plan.

The 1997 law changes the exemption equivalent amount of unified estate and gift tax credit. The exemption equivalent is increased from $600,000 to $1 million during a phase in period through 2006. The equivalent is $625,000 for 1998, and increases $25,000 annually for four years and then $50, 000 annually after that through 2006.

Texas is a state where probate is not an expensive proposition. HOWEVER, this assumes that you have a valid will. If your will is invalid, obsolete, or nonexistent, you take the risk of having a judge making financial and guardian decisions, which normally would have been yours to make. This is expensive, and can lead to some unintended and even undesired results. Take a few moments and make sure your will(s) and estate plans are up to date.

The $10,000 annual gift tax exclusion as well as the generation-skipping transfer exemption of $1 million will both be adjusted for inflation after 1998.

Depending upon the size of your estate, there are many things you can do to limit or reduce estate taxes. With maximum upper end rates in excess of 50%, why not take advantage of these items, and help our government out in their austerity program.