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Introduction to estate planning

Geraldine Clahar - Monday, July 24, 2017



What is an estate?


An estate is the accumulation of everything that one owns – real and personal property.Some estates are small others are large.The following are assets that are part of your estate:

(a)Home(s) and contents

(b)Art collections

(c)Coin collections



(f)Investment property – rental property

(g)Life insurance proceeds

(h)Pension plans


(j)Bank accounts

(k)Investment accounts

(l)Investment value of a business

(m)Revocable trusts



Who has an Estate?



The first time one owns something, the estate is created and grows until death.So, the estate could be created at birth assuming the child is given gift of money or other assets.In effect, everyone has an estate.Hence everyone should be concerned about what happens to that estate in the event of death.


How long does the estate exist?


The estate is created the first time one acquires an asset.Since a dead person cannot have an estate, at death the estate of the deceased must be distributed to others and once the distribution is complete the estate dies.


How is the estate disposed of?


The old adage goes “You can’t take it with you.”Everything you own at death has to be transferred to someone or something else within a short time of death.You might not have an estate tax issue, but there will be an issue of transfer of ownership of assets.How the asset is transferred can impact the tax base of the recipient, so serious consideration should be made when transferring assets from one individual to another.


There are several ways that the assets of a deceased can be passed or distributed to others:

(a)Will or trust


(c)Probate proceedings

(d)Operation of Law


These assets can be given away during that person’s life time (gifts) or at death (bequests). Maximum that can be gifted to any individual each is currently  $14,000 per year.


Spousal Exemption and Portability:


Each person is allowed to accumulate a certain amount of assets free of estate tax: exemption - $5,459,000 (federal) and $5,250,000 (NYS).The asset value in excess of the exemption amount is subject to estate tax – 40% federal tax rate. The exemption that one spouse does not use can be ported over (transferred) to the surviving spouse.This is added to the surviving spouse’s exemption amount allowing a greater exemption upon that spouse’s death.This is at the federal level only.Portability is not available in New York State.


Portability is an election! To make the election a Form 706 must be timely filed – No later than 9 months after date of death.This is a very exact calculation!That is, start counting from the date of death, not the month of death!!



 3 Reasons to file Form 706 even if no tax is due:



1.To make the portability election

2.To notify the IRS of valuations made to appreciable assets that have been passed on

3.To establish the fair market values of assets at the date of death


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G.A. Clahar, CPA  ·  1188 Village Ave., Baldwin, New York 11510  ·  Phone: (516) 483-3851