Newspaper article The Florida Times Union

Planning Can Ensure Minimum Estate Taxes

Newspaper article The Florida Times Union

Planning Can Ensure Minimum Estate Taxes

Article excerpt

Volunteers from the Society of Financial Service Professionals of Northeast Florida spent a recent Saturday morning at The Florida Times-Union answering readers' phoned-in questions about estate planning, taxes and investing. Here are highlights of the session. Q: I am married and have two small children. Both my wife and I are in our early 40s and we have a net worth of about $800,000. With life insurance our net worth is $1.4 million. Will we have any estate tax and how can we minimize that tax?

A: Generally, assuming the way you have ownership of your property and the beneficiaries on your policies you would in effect be giving everything to your spouse if you died first. If this happens, you would be missing out on the $650,000 lifetime unified credit that everyone receives. This credit will increase to $675,000 in the year 2000.

It may make sense for you to set up a credit shelter trust. At the first death, $650,000 would be set in trust with the income going to the surviving spouse. At the time of the surviving spouse's death, the principal would go to your children.

Using this option, you would be able to currently pass around $1.3 million of property without incurring any estate tax. The lifetime unified credit will be growing to a million each, for you and your wife, by the year 2006. So if your net worth did not grow at that time you would not have an estate tax problem.

-- Michael W. Halloran, CLU, ChFC, AEP, Northwestern Mutual Life/Robert W. Baird and Co., Incorporated

Q: My adjusted gross income for 1999 will be over $200,000. I participate in our company 401(k) plan. My wife and I file our taxes jointly. Since my wife doesn't currently work, can she make a $2,000 deductible contribution to her IRA?

A: Unfortunately, No.

Spouses of participants in company retirement plans may make fully deductible contributions if the couple's adjusted gross income is not more than $150,000 and the spouse is not an active participant.

-- Jack Morey, CLU, CHFC, CFP, SunTrust Securities Q: A gentleman called in and stated that his mother and father-in-law, who are in their 70s, are desiring to sell their principal residence and relocate back to their home state. …

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