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In a properly arranged estate, the size of a married couple's estate at the death of the surviving spouse determines the estate taxes due. Consider the following:
Current Ages of Spouses | Additional Years to
Estimated Joint Life Expectancy* |
Estate Growth Rate Factors | |||
---|---|---|---|---|---|
Male | Female | 5% | 8% | 10% | |
40 | 40 | 49 | 10.921 | 43.427 | 106.719 |
50 | 45 | 42 | 7.762 | 25.339 | 54.764 |
50 | 50 | 39 | 6.705 | 20.115 | 41.145 |
55 | 50 | 37 | 6.081 | 17.246 | 34.004 |
60 | 55 | 32 | 4.765 | 11.737 | 21.114 |
60 | 60 | 30 | 4.322 | 10.063 | 17.449 |
65 | 60 | 28 | 3.920 | 8.627 | 14.421 |
70 | 65 | 23 | 3.072 | 5.871 | 8.954 |
70 | 70 | 21 | 2.786 | 5.034 | 7.400 |
75 | 70 | 19 | 2.527 | 4.316 | 6.116 |
$17,246,000 Estate
- 862,300 Administration Costs (5%)
- 8,625,220 Federal Estate Tax (1)
$ 7,758,480 Net Estate to Heirs
$ 9,487,520 Total Estate Shrinkage (55%)
(1) Based on the estate reduced by administration costs, on 2001 estate tax rates and a $1 million unified credit equivalent. The Economic Growth and Tax Relief Reconciliation Act of 2001 repeals the estate tax for one year –2010. Under that law, the federal estate tax continues, but with increasing unified credits and decreasing top estate tax rates, until 2010 when it is repealed only for that year. Without future Congressional action, the 2001 federal estate tax rules will be reinstated in 2011, but with a $1 million exemption equivalent (as scheduled to increase prior to the Act).
In the case of a single person, the size of the individual's estate at death determines the estate taxes due. Consider the following:
Current Age | Additional Years to Estimated Life Expectancy* |
Estate Growth Rate Factors | ||
---|---|---|---|---|
5% | 8% | 10% | ||
40 | 43 | 8.150 | 27.367 | 60.240 |
45 | 38 | 6.385 | 18.625 | 37.404 |
50 | 33 | 5.003 | 12.676 | 23.225 |
55 | 29 | 4.116 | 9.317 | 15.863 |
60 | 24 | 3.225 | 6.341 | 9.850 |
65 | 20 | 2.653 | 4.661 | 6.727 |
70 | 16 | 2.183 | 3.426 | 4.595 |
75 | 13 | 1.886 | 2.720 | 3.452 |
80 | 10 | 1.629 | 2.159 | 2.594 |
$ 4,661,000 Estate
- 233,050 Administration Costs (5%)
- 1,730,373 Federal Estate Tax (1)
$ 2,697,577 Net Estate to Heirs
$ 1,963,423 Total Estate Shrinkage (42%)
(1) Based on the estate reduced by administration costs, on 2001 estate tax rates and a $1 million unified credit equivalent. The Economic Growth and Tax Relief Reconciliation Act of 2001 repeals the estate tax for one year –2010. Under that law, the federal estate tax continues, but with increasing unified credits and decreasing top estate tax rates, until 2010 when it is repealed only for that year. Without future Congressional action, the 2001 federal estate tax rules will be reinstated in 2011, but with a $1 million exemption equivalent (as scheduled to increase prior to the Act).