ESTATE PLANNING

Federal Estate Tax

The material found on this site is for general information only. Concepts included on this site dealing with federal estate tax issues may not be the most acceptable or best solutions to your situation. You should consult your attorney and tax professional for advice on your particular situation.

The Federal Estate Tax is a transfer tax on the value of your assets at death. The Federal Estate Tax is calculated on the value of your assets at the time of your death. Included in your taxable estate would be ownership of real property, business assets, financial accounts, retirement plans, and life insurance death benefits of which you are the owner. Estate tax is generated on estates with a valuation of over $5,490,000 (2017 value).

Fortunately, there are a number of estate planning tools available that can be utilized to reduce, and possibly eliminate, the federal estate tax.

Marital Exemption - Portability
An unlimited marital deduction allows you to leave all or part of your assets to your surviving spouse free of federal estate tax. Portability may allow the first spouse that dies to effectively transfer his or her unused estate tax applicable exclusion amount to the surviving spouse who can then use it for his or her gift or estate tax purposes.

In 2017, each spouse has his or her own estate tax exemption of $5,490,000. Using portability, couples may have assets up to $10,980,000 without owing federal estate tax. To use "portability" you have to elect it on the estate tax return of the first spouse to die, even when no tax is due.

Staying aware of estate tax changes and working with your attorney and tax advisor are important to those attempting to keep their taxable estate below the threshold and avoid the 40% federal estate tax.

2017 Federal Estate Tax Applicable Exclusion Amount
$5,490,000 Exemption Per Person
40% Federal Estate Tax Maximum Rate

2017 Annual Gift Tax Exclusion 
$14,000 Individual 
$28,000 Married Couple

Annual gift tax exclusion - You may give as much as $14,000 per year to any number of individuals without incurring federal gift tax and without having to file a gift tax return. If your spouse consents to the gift, you can give up to $28,000 to each individual, without incurring federal gift tax, but a gift tax return must be filed.

Disclaimer

This information is provided as a guide only. It is not intended to constitute tax or legal advice. This chart represents State Farm's understanding of the tax laws in effect on the printing date. You should contact your qualified tax advisor for specific advice.

Neither State Farm™ nor its agents provide tax or legal advice.

State Farm Life Insurance Company (Not licensed in MA, NY or WI)
State Farm Life and Accident Assurance Company (Licensed in NY and WI)
Bloomington, IL

IL - 28.9