And why do you believe that cash wouldn't be considered part of the estate?
https://www.fidelity.com/estate-planning-inheritance/estate-planning/asset-strategies/cash
And why do you believe that cash wouldn't be considered part of the estate? ...
Estate basis consistency and reporting: What practitioners need to know - Journal of Accountancy
Probably wishful thinking but reading this implies that cash is exempt from reporting. Being dead the heirs would be responsible for reporting. Leaving cash seems to give them more options.
The Unified Tax Credit Amount, the amount of the estate before federal estate taxes are owed is 5.49 million for 2017. ...
Yes, the OP isn't adding up for me. Did you mean something else? Did you leave out some information?
Estate tax is on the entire estate. House, cars, collectibles, investments, cash - the form doesn't matter. Probably the value of outstanding loans as well.
Please clarify.
Also, Federal Estate tax doesn't kick in until $5,490,000, and currently increases with inflation. If I hit that level, I'm pretty sure I'd just start giving it away to friends/family/charity. I'm already plenty comfy well below that, if that amount isn't enough cushion for me, I guess no amount would be.
-ERD50
I guess that would depend on what age you were. I'm not keen on paying an extra 40% on my life's earnings no matter what the amount. It seems punitive. Then again, you're dead.
I don't know the legal status of a two-party checking account when it comes to total estate, but that might work to pass some money (legally). Never really thought about it before. With current limits, I'm not too worried about it either. YMMV
If there is more than one name on a bank account, technically if one dies then the survivors own the account. That can play in other ways too though, if any one of the owners is in litigation, the entire account can be at risk. pick your poison... carefully.
If there is more than one name on a bank account, technically if one dies then the survivors own the account. That can play in other ways too though, if any one of the owners is in litigation, the entire account can be at risk. pick your poison... carefully.
when you add someone as jwros, you have made a gift which may require a gift tax return depending upon value.
What if you have a whole life insurance policy and your heirs are the beneficiaries? Is the death benefit part of the estate? I don't know the answer, but I'll bet someone here does.
If structured correctly, it can be done.
From what I understand, the normal way to do this is the owner of the policy (and beneficiaries, of course) should all be outside of the estate. Then the estate 'gifts' the beneficiaries, which can then use the money to pay the premiums. If the people inside the estate pay the premiums directly, it doesn't pass muster.
And the beneficiaries can't be 'forced' to pay the premiums, or it isn't a 'gift'.
But those pesky premiums! So if you sort that out, it still amounts to a bet with the insurance company. After all (and the insurance people never mention this), the 'gifting' alone gets the money out of the estate. So it boils down to whether an ins policy is a good investment or not, and most people would say "No".
Sometimes the policy is used to provide liquidity at death, so money is available to pay the estate tax when the estate itself isn't easily liquidated (real estate, a business, etc). But there might be better ways to gain liquidity.
-ERD50
when you add someone as jwros, you have made a gift which may require a gift tax return depending upon value.
you don't need to do all the gifting to and so on. Just set up a life insurance trust and fund the trust to buy the insurance in a lump sum. This is irrevocable. The trust owns the insurance and the grantor does not control it. So it is not in the estate. I've heard cases where the trust can also be the beneficiary that then distributes to the heirs. Otherwise it could just have the heirs as beneficiaries. This way to don't have don't have to worry about some outside owner running into financial issues and terminating the policy.
you don't need to do all the gifting to and so on. Just set up a life insurance trust and fund the trust to buy the insurance in a lump sum. This is irrevocable. ...
I think you are correct - they key is that it must be irrevocable (which is OK if that is understood), then the 'gift' issue doesn't apply, since the estate has zero control at that point.
But it still seems like the insurance is superfluous. You could just put $X in the trust, right? OK, you have access to your money longer, and I suppose you could just stop paying premiums and accept the insurance value at that point? So maybe more flexible?
Plus some administration costs for the trust, but probably pretty small?
-ERD50