Protect and Enhance Your Estate: Definitive Strategies for Estate and Wealth Planning 3E by robert a. esperti renno l. peterson

Author:robert a. esperti, renno l. peterson
Language: eng
Format: epub
Published: 2018-09-19T16:00:00+00:00

Effective Transfer Tax Planning for Unmarried Couples

Unmarried couples with estate tax concerns can greatly benefit by engaging in transfer tax planning in addition to the good estate planning exemplified by Jack and Jill. At what threshold level of net worth does an unmarried couple have an estate tax issue? Under current law, when one of the partners has an estate in excess of $5 million in 2011, $5,120,000 in 2012, his or her estate may be subject to federal estate tax.

Beginning in 2013 that threshold amount drops to $1 million, unless Congress changes the law before then. A married couple engaging in the planning we describe in Chapter 25, “Planning for a Spouse,” can have a combined estate of double these threshold amounts ($10 million today, $2 million beginning in 2013) without incurring federal estate tax at the second death. The unlimited estate tax marital deduction allows a married couple to avoid any estate tax at the first death no matter how large the estate. Unmarried couples with a combined estate today over $5 million ($5.12 million in 2012) or over $1 million beginning in 2013 who leave their estates to the survivor will have an estate tax issue at the second death and will also have an estate tax issue at the death of the first partner if their estate exceeds $5.12 million with death occurring before the end of 2012, and $1 million if death occurs after 2012.

Since unmarried couples do not have the benefit of the unlimited marital gift tax deduction, or the unlimited marital estate tax deduction. They often need to engage in more sophisticated planning to maximize assets available to the surviving member of the couple by minimizing taxes. But there are many tax planning strategies and techniques available to unmarried couples. Some of the following techniques require making life transfers, which can result in loss of control over the property transferred. You will want to work closely with your planning advisors to make sure you don’t take action today that you will regret in the future.

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