Minimize taxes – pass on more of your estate to heirs
Assets you own or control are a part of your estate and can be taxed when you die. These types of assets can include:
- IRAs and retirement plans
- Life insurance
- Investments portfolios
- Annuities
- Real estate
- Other assets that have a beneficiary designation
Many people are surprised to find that when they add up their assets, they may reach an estate value threshold that qualifies them for substantial estate taxes.
Estate tax – rates and exemption levels
Estate tax may apply to your taxable estate at your death. Your taxable estate is your gross estate less allowable deductions.
Your gross estate includes the value of all property in which you had an interest at the time of death minus funeral expenses paid out of your estate, debts you owed at the time of death, any marital deduction, any charitable deductions, and the state death tax deduction.
To help determine the value of your estate so that you can see the estate tax rates and exemption levels that would apply to you, please use the Gross Estate Worksheet.
Under previous law, estate taxes were repealed completely for 2010. Currently, tax years 2010 through 2012 are based on the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act that was signed into law by President Obama on December 17, 2010.
History of Estate Tax Rates and Exemption Levels
| Year | Estate Tax Rate | Estate Tax Exemption Level |
|---|---|---|
| 2008 | 45% | $2,000,000 |
| 2009 | 45% | $3,500,000 |
| 2010 | 0% / 35% | Repealed / $5,000,000 |
| 2011 | 35% | $5,000,000 |
| 2012 | 35% | $5,000,000 |
| 2013 | 55% | $1,000,000* |
*This law is only good for two years and will sunset on December 31, 2012, meaning that on January 1, 2013 the federal estate tax exemption and rate will default to the numbers that were in effect in 2002.
In addition, the heirs of decedents who died in 2010 have the choice to use the $5,000,000 estate exemption/35% estate tax rate or $0 estate tax exemption/0% estate tax rate coupled with use of the modified carryover basis rules.
Knowing your potential estate tax liability is a great place to start your estate tax plan. Use the Estate Tax Planning Calculator to project the value of your estate, and the associated estate tax for the next ten years.
Tax services - minimize estate taxes and pass on more assets to heirs
One of the goals of many estate plans is to reduce estate taxes so that more of your estate can be passed on to your loved ones. You can use a variety of strategies to reduce your tax bill, including trusts and annual gifting.
There are also many tax issues related to your investments and tax reporting. MassMutual Trust can help you with trust tax preparation services and ongoing monitoring of any tax issues that may relate to you.
In addition, MassMutual Trust will talk with your professional advisors on any tax-related issues. We also provide the appropriate year-end tax information.