QUESTION: Should I give away assets to avoid estate taxes?

ANSWER BY RICK COURTNEY:

A lot of folks are concerned about whether they should give away assets to avoid estate tax.  The answer to most people is no, and the reason is that estate tax laws have changed dramatically in the last several years.  In 2012, the estate tax exemption level- that is the amount of assets that you can own at your death and your estate would pay no tax –  was set at $5 million and it has increased every year since then.

So a single individual who dies having an estate – all of their money and assets plus the face value of life insurance policies they own, minus their debts – if that figure is below 5 million or the estate tax limit in the year of their death there would be no estate tax paid.

So if you’re an individual whose estate value is less than the estate tax limit in the year of your death, there would be no estate tax paid at your death and all the assets would pass to your heirs free of those taxes.

If you’re a couple, you would have two estate tax exemptions to use to shelter – so it would be twice that limit – and all the assets of the couple could pass to the children and heirs without estate taxes.

So estate tax limits or exceptions have gone up in recent years to allow an individual or a couple with more than 5 million for an individual or 10 million for a couple to shelter those assets from estate taxes without giving those assets away.

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