Wills and estate planning

Estate Planning

Your estate consists of all your property – minus debts and taxes.

Your estate is made up of all the property you own, or in which you have some ownership interest at the time of your death. Under federal estate tax law, your estate consists of your individual property, your share in jointly owned property, life insurance, pension benefits, death benefits, property you transferred to another while you were still living, but which you maintained control of, and anything else you own when you die, such as your right to the repayment of debts that are owed to you. Debts and taxes that you owe to others are also considered a part of your estate, and must be paid out of your assets after you die.

The federal government imposes no estate taxes on any property you leave to your surviving spouse. In 1999, you could transfer up to $650,000 to persons other than your spouse without incurring federal estate taxes. This amount will increase periodically until the year 2006 when estates valued at up to $1 million will be exempt from estate taxes.

Some states charge inheritance taxes, which are payable not by the estate but by the beneficiary. However, most provide relatively large exemptions for spouses and surviving children. When you leave property to more distant relatives, or to someone unrelated to you, the amount of the inheritance tax assessed in some states can be fairly large. In some states, the amount of inheritance tax charged to an unrelated beneficiary can be 17 percent or even more.

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