Broker Check

Estate Analysis

Why do you need an Estate Analysis? When you die, the government may take part of your estate through taxes. By planning your estate now, however, you have the ability to control how much the government can assess. The unplanned estate will give the Internal Revenue Service (IRS) a welcome windfall. A planned estate, on the other hand, can minimize taxes and settlement costs and preserve your assets for your heirs to enjoy. There are costs associated with every death. It is your right to pass your estate to your heirs intact. To do so, you need to create a source of liquidity - cash - to meet your estate`s liquidity needs such as taxes, debts and last expenses. If a cash fund is not available, such costs must be paid from the estate itself. In this case, your heirs may receive less than you anticipated. What estates are affected? There is a popular misconception that federal and state death taxes affect only persons of substantial wealth. While this was the situation several decades ago, it may no longer be true. Instead, as a result of greater marginal incomes that may be invested and currently inflated property values, far more people now own estates that earn the dubious distinction of being subject to this tax.

ANNUAL GIFT TAX EXCLUSION: $14,000*
ESTATE TAX TABLE* TAX RATE*
$0 - $10,000 18%
$10,001 - $20,000 20%
$20,001 - $40,000 22%
$40,001 - $60,000 24%
$60,001 - $80,000 26%
$80,001 - $100,000 28%
$100,001 - $150,000 30%
$150,001 - $250,000 32%
$250,001 - $500,000 34%
$500,001 - $750,000 37%
$750,001 - $1,000,000 39%
$1,000,001 and up ---- 40%

* 2016 Federal Estate and Gift Tax Tables

Providing for Estate Cash Needs.
Options:

  • 1- Sell estate assets, to meet cash needs. This may result in assets being liquidated under forced sale conditions. The most liquid property in the estate goes to pay taxes, capital gains, expenses and creditors. In this case, the family will inherit the assets of poorer quality and the assets that are most difficult to convert to cash.
  • 2- Borrow the necessary cash to meet cash needs. There is no guarantee that the executor will be able to obtain a loan of sufficient amount. Even if a loan is obtained, the family eventually faces the necessity of repaying the loan plus interest. Borrowing does not really solve the problem, but merely postpones dealing with it.
  • 3- Use existing liquid assets, to meet the cash needs of the estate. This method is analogous to keeping $100,000 in the bank to replace a home if it should burn. You probably would prefer to have an insurance company carry the risk and would therefore pay premiums to protect against the possibility of a $100,000 loss. Premiums paid for life insurance to pay estate taxes should be thought of in the same manner.
  • 4- Life insurance, could be the least expensive and most efficient method for providing the cash needed to pay estate expenses.

What "Estate Analysis" does for you.

Estate Analysis will not increase the value of your estate, reduce taxes, eliminate probate costs or guarantee family income. What it will do is give you information - information vital to making intelligent decisions about your financial future and the future of your loved ones.

To create an estate analysis report for you, we need information on the following:

  • Assets and Liabilities
  • Wills and Trusts
  • Life Insurance Policies
  • Retirement Benefits

For more information about estate analysis, please e-mail [email protected]