The Federal and Gift Tax is a tax on the transfer of assets while alive or at the time of death.
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Who is affected by Estate Taxes? The heirs of people who are worth more than $5,000,000 when they die.
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The law provides that:
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Individuals can give up to $13,000 per year to as many individuals as they wish, tax free. A married couple can jointly give twice that amount.
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Individuals can give, while alive or at death, an unlimited amount of wealth to their spouse, as long as they are U.S. citizens.
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In addition, individuals can give, while alive, up to $5,000,000 by using their tax credits.
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There is a credit against Estate Taxes of $1,730,800. That is the tax on the first $5,000,000. Thereafter, taxes are payable at a rate of up to 35%. Taxes are due nine months after death.
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A "Bypass Trust" allows a married couple to use both spouses' $5,000,000 exemption equivalent. This results in a minimum of $10,000,000 being sheltered from estate tax rather than just the $5,000,000 which results when only the unlimited marital deduction is used.
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