Arthur S. Brown - Death & Gift Taxes

Effective planning minimizes administration costs and eliminates or reduces Estate Taxes. A rough estimate of death taxes can be calculated by taking your Net Estate Value less (-) your Lifetime Exclusion Amount (shown below) times (x) 50%.

If your net worth (including insurance policies, investments, etc.) is less than the applicable exclusion amount in the year of your death there are no Federal Estate Taxes.

YEAR OF DEATH/GIFT	LIFETIME EXCLUSIONS	DEATH TIME EXCLUSIONS	MAXIMUM ESTATE RATE	GST EXEMPTION
2003	$1,000,000	$1,000,000	49%	1,100,000
2004	$1,000,000	$1,500,000	48%	1,500,000
2005	$1,000,000	$1,500,000	47%	1,500,000
2006	$1,000,000	$2,000,000	46%	2,000,000
2007	$1,000,000	$2,000,000	45%	2,000,000
2008	$1,000,000	$2,000,000	45%	2,000,000
2009	$1,000,000	$3,500,000	45%	3,500,000
2010	$1,000,000	Repealed	Repealed	Repealed
2011	$1,000,000	$1,000,000	55%	$1,400,000 (estimated)

If you are married and have a net taxable estate, you can create an "A-B" Trust. This plan preserves both spouse's tax exclusion. The "A" stands for "above ground" spouse, and the "B" stands for the "below ground" spouse. The Survivor's Trust is the "A" Trust and the Decedent's Trust is the "B" Trust.

With an "A-B" Trust, the Surviving Spouse has unlimited access to the income and assets contained in the Survivor's Trust. In the "B" Trust, the Surviving Spouse has a lifetime use to all the income from the "B" Trust plus principal for health, education, maintenance and support. On the death of the Surviving Spouse, there will be no probate, no death taxes on the "B" Trust and no death taxes for the surviving spouse if the "A" Trust assets are below the exclusion amount.

If you are married and either spouse has a net estate worth over the tax exemption or if this is not a first marriage for either spouse, then a Qualified Terminal Interest Property Trust (QTIP) can be created.

The QTIP Trust will not only preserve the tax Exemptions for each spouse, but also preserve the dignity of each spouse's bequest upon death. This will insure that each spouse's children receive what they deserve.