Protecting Estates.
Protecting Legacies.

Preparing to manage estate taxes

You may have resigned yourself to the notion of having your estate taxed as being an inevitability. Many in San Jose come to us here at Temmerman, Cilley, Kohlmann & Norcia, LLP. with the same assumption, as well as concerns that having to pay tax will leave little to go their beneficiaries. Yet despite the seeming inescapability from death and taxes, you may be pleasantly surprised to learn that there is a strong possibility your estate will not even be taxed at all. 

The federal government has established an estate tax exemption that allows your estate to avoid being taxed as long as its total taxable does not exceed the threshold amount (in 2019, that amount is $11.4 million). It is for this reason that many (even a majority of) estates are not subject to federal estate taxes. Indeed, projections released by the Internal Revenue Service show that only 31,700 estate tax returns are expected to be filed in 2019. 

Many of those returns will not be filed for the purpose of paying taxes. Instead, they are filed by people electing portability. You see, the unlimited spousal exemption allows you to gift an unlimited amount to your spouse without it being subject to any tex. Thus, you can leave your spouse the entire amount of your estate and still preserve your estate tax exemption. Your spouse can then elect to combine your exemption amount with theirs (protecting $22.8 million from estate taxes). This is portability, and your spouse must elect to do it by filing an estate tax return within nine months of your death. 

You can learn more about preserving estate assets for your beneficiaries by continuing to explore our site. 

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