Are you concerned that your spouse will be faced with a large estate tax bill upon your death? If so, you are in the same position as many others. It is your goal to leave your estate to your spouse tax-free. While this may not be entirely possible for everybody, it is a goal you should strive to reach.
Generally speaking, most estates do not owe federal estate of gift tax. The reason for this is simple: you can legally leave a substantial amount of property tax-free.
Many people are under the impression that the government will do whatever it can to take as much as possible in estate and gift tax. However, nothing could be further from the truth. There are laws in place to help those who are dealing with the estate planning process.
Known as the unified gift and estate tax, for any death occurring in 2013, you can leave behind or give away up to $5.25 million in total before your estate is required to pay tax. As you can see, this is a large amount of money. Most people realize that the value of their estate will not exceed $5.25 million, meaning that their spouse will not owe any tax.
Estate Tax Seattle Washington
Personal Estate Tax Exemption
With this exemption in place, there is a set dollar amount that can be passed on tax free, regardless of who is the beneficiary (spouse or somebody else). As noted above, the 2013 exemption in Seattle Washington is set at $5.25 million with this number set to increase to $5.34 million in 2014.
The Marital Deduction
With this, all property left to a surviving spouse is able to pass free of estate tax. It is important to note that this deduction is not valid for those who leave property to non-citizen spouses.
Rules for Married Couples
A surviving spouse is in position to get a big tax break. Here is what you need to remember: if the person who died did not use up their individual tax exemption, the surviving spouse is able to use what is left. In essence, this gives the couple a total exemption of twice the individual amount.
What about State Tax?
Since state estate taxes vary from one state to the next, you must sit down with a local estate planning attorney to discuss your situation. Many states have their own inheritance tax, and if you live in one of these states there are not many steps you can take to avoid these taxes. That being said, your attorney can help you take the appropriate measures.
As you can see, there are things you can do to leave your estate tax-free to your spouse. It is important to learn as much as you can now, ensuring that everything is in place for the future.