Estate tax planning is a vital part of your end-of-life plan, especially if you want more money to go to your family than to the government. Not all estate planning attorneys make decisions on the basis of taxes, so it is important to find an attorney with tax experience or hire an accountant to review your estate plan.
Each year, Congress defines an amount of money that will be exempt from estate tax. The 2011 and 2012 rates exempt the first $5,000,000 ($5 million) of an individual’s estate from federal taxes. This amount may seem high, but remember that the total value of your estate includes not just the money you have in the bank, but also the value of your home, car, jewelry, electronics, and all other property. The worth of your estate can grow quickly, and it is important to have a plan to reduce the amount in taxes you must owe.
Clever estate planners make use of two tools: the credit shelter trust and the marital deduction.