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Law Offices of Roshni T. Desai
Long-term Planning For Orange County
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Avoiding the federal estate tax

Santa Ana residents have to deal with the issue of taxes every year of their adult lives. Yet few realize that even one's death may not signal an end to their tax liabilities. The assets that one has accumulated in hopes of passing on to their beneficiaries may also be subject to tax. However, just as is the case with one's income taxes, there are tax mitigation methods that may help to reduce (or even eliminate) one's estate tax liability

The first point to ponder when considering an estate tax avoidance strategy is whether one will be required to pay the tax at all. According to information shared by Forbes Magazine, the federal estate tax threshold for 2018 is $5.6 million. What this means is that if the taxable value of one's estate does not exceed that amount, then their estate is not subject to the tax. The federal gift tax exemption even allows one to gift the entirety of their estate to their spouse without any taxes being withheld. What is more, one's surviving spouse can even claim the unused portion of their exemption, paving the way for a married couple to protect as much as $11.2 million from estate taxes. 

The process of claiming a spouse's unused estate tax exemption (a process formally known as "portability") can be tricky, however. The unused amount is not simply roller over to the surviving spouse; rather, they must claim it by filing an estate tax return the same year their spouse dies. The estate tax form 709 may seem daunting, yet one should not worry about completing it correctly; per the website for the Internal Revenue Service, there are detailed instructions to guide those who are only submitting it to claim portability. 

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