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Nunn CO | If you have more then approx. $6 million in assets it's a smart play. Anything over that is taxed at almost half.
Example;
Farm couple has $10 million is assets.
Option 1
When he/she dies the estate would owe approx. $2 million in taxes before the children can claim it. (10 million net worth minus 6 million exemption equals 4 million of taxable income. at 50% tax rate. equals 2 million in taxes.)
Option 2
Farm couple still has $10 million dollars.
When spouse 1 dies, lets say father, he leaves 6 million dollars to his wife. In USA there is no tax between spouses. His estate now has $4 million in it. Since $4 million falls under the $6 million taxable rate he can leave that $4 million to his child. 10 years down the road his wife passes. She likely has $5 million left after all expenses at end of life. Since she has $5 million which is also less then the $6 million exemption she can leave all that to her child as well.
Essentially a "Couple" can gift $6 million each at death.
As a note. The smart way to do this is when parent number one dies he leaves his $6 million to a trust and makes his wife the beneficiary. When wife passes she leave her half to the trust as well and then the kid becomes the beneficiary of it all. Ensures your kid doesn't piss away the money since its in a trust but sets them up safe and avoids future inheritance tax.
As always ask your CPA | |
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Inheritance
