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Affordable estate planning for Arizona families using powers of attorney, wills and trusts. Call 480-229-6220 to schedule a complimentary consultation at your home or in our Ahwatukee office.
Estate Taxes Note

Four Peaks Planning, Inc. has qualified estate tax professionals should your estate potentially face estate taxes.

Contact us for a free consultation.

Estate tax overview
What to know:
  • Arizona does not have its own estate tax nor inheritance tax
  • Assets owned in other states may be subject to that state's estate tax
  • Individuals who pass with under $5.43 million in 2015 are not subject to federal estate taxes
  • Married couples who pass with under $10.86 million in 2015 are not subject to federal estate taxes
  • To calculate your estate tax liability, add your total assets and subtract liabilities
  • Estate Taxes

    The estate tax can be a confusing topic, partly due to ongoing congressional changes to laws regarding the estate tax. First, Arizona does not have its own estate tax. If you own property in other states, some states have their estate or inheritance tax. Click here to view other state estate and inheritance taxes.

    At this time, Arizona residents with property only in Arizona only need to concern themselves with the federal estate tax. As of 2015, individuals with estates under $5.43 million and married couples with estates under $10.86 million are not subject to the estate tax.

    Any amount over that limit is taxed at a maximum rate of 40%.

    What will happen beyond 2013 is anybody's guess. Below is a quick recent history of the estate tax:

    A ten-year federal estate tax plan enacted in 2001 through 2011 increased the federal estate tax limit gradually from $675,000 in 2001 to $3.5 million in 2009, a repeal of the estate tax in 2010 and then a return to $1 million in 2011. Congress debated throughout 2010 what to do before at the beginning of 2011 instituting a three year plan of a $5 million limit in 2011, $5.12 million in 2012.

    History of Estate Tax Limits and Rates

    YEAR
    1982
    1983
    1984
    1985
    1986
    1987 to 1998
    1998
    1999
    2000 and 2001
    2002
    2003
    2004
    2005
    2006
    2007 and 2008
    2009
    2010
    2011
    2012
    2013
    2014
    2015

    EXCLUSION AMOUNT
    $225,000
    $275,000
    $352,000
    $400,000
    $500,000
    $600,000
    $625,000
    $650,000
    $675,000
    $1,000,000
    $1,000,000
    $1,500,000
    $1,500,000
    $2,000,000
    $2,000,000
    $3,500,000
    $Repeal
    $5,000,000
    $5,120,000
    $5,250,000
    $5,340,000
    $5,430,000

    MAXIMUM TAX RATE
    65%
    60%
    55%
    55%
    55%
    55%
    55%
    55%
    55%
    50%
    49%
    48%
    47%
    46%
    45%
    45%
    0%
    35%
    35%
    35%
    35%
    40%


    Estimating Your Estate Tax Liability

    For very simple purposes, total your personal assets and subtract your liabilities. If you have any estate tax concerns, contact an estate planner.

    To calculate your gross assets, first determine if an asset is owned solely by you or is owned jointly with rights of survivorship. If owned solely, count 100% of the value. If owned jointly, include only 50% of the value.

    • Bank accounts
    • Investment accounts
    • Stocks and bonds
    • Personal effects (jewelry, antiques, collectibles, art, guns, etc.)
    • Automobiles
    • Boats and airplanes
    • Real estate
    • Life insurance owned by you - for example if purchase a $1 million life insurance policy, the $1 million would count as an asset in your estate tax calculation.
    • Money owed to you
    • Trust assets of which you are a beneficiary in which you have a "general power of appointment"
    • Taxable lifetime gifts in excess of the annual gift tax exclusion
    • Some transfers made within 3 years of your death
    Liabilities of your estate include:
    • Debts and expenses
      • Mortgages
      • Lines of credit
      • Personal loans
      • Credit card debt
      • Funeral expenses
      • Medical bills
      • Administrative bills to settle the estate
    • Charitable gifts
    • Transfers to a spouse who is also a U.S. citizen

    Examples

    1. If you pass in 2015 and your gross estate is valued at $1 million - $5.43 million estate tax exemption = No estate tax due

    2. If you pass in 2015 and your gross estate is valued at $6.25 million - $5.43 million estate tax exemption = $1,000,000 is subject to estate taxes.

    3. If married and you both pass in 2015 and your gross estate is valued at $6.25 million - $10 million estate tax exemption = No estate tax due

    Minimizing Estate Tax Exposure

    Prior to 2011, married couples needed an A-B trust or Bypass/Disclaimer Trust to each get an exemption. New laws remove that need but one never knows how future legislation may develop. Four Peaks Planning, Inc. typically creates Bypass/Disclaimer Trusts for all married couples.

    There are variety of strategies using irrevocable trusts, such ILITs, CRATs and CRUTs, to potentially minimize estate taxes for estates. Four Peaks Planning, Inc. has several qualified attorneys who we refer these clients to for legal advice.

    Other States' Estate and Inheritance Taxes

    Please note we do our best to keep other states' information current but some information may be dated. Consult a professional in the particular state(s) in which you own assets.

    State
    Connecticut
    Delaware
    Illinois
    Indiana
    Iowa
    Kansas
    Kentucky
    Maine
    Maryland
    Massachusetts
    Minnesota
    Nebraska
    New Jersey
    New York
    North Carolina
    Ohio
    Oklahoma
    Oregon
    Pennsylvania
    Rhode Island
    Tennesee
    Vermont
    Washington DC
    Washington State
    Tax Type
    Estate
    Estate
    Estate
    Inheritance
    Inheritance
    Estate
    Inheritance
    Estate
    Estate/Inheritance
    Estate
    Estate
    Inheritance
    Estate/Inheritance
    Estate
    Estate
    Estate
    Estate
    Estate
    Inheritance
    Estate
    Inheritance
    Estate
    Estate
    Estate
    Exemption
    $2,000,000
    $3,500,000
    $2,000,000
    $100
    0
    $1,000,000
    $500
    $1,000,000
    $1,000,000/$150
    $1,000,000
    $1,000,000
    $10,000
    $675,000/$0
    $1,000,000
    $3,500,000
    $338,333
    $2,000,000
    $1,000,000
    $0
    $675,000
    $1,000,000
    $2,000,000
    $1,000,000
    $2,000,000
    Max. Tax Rate
    16%
    16%
    16%
    20%
    15%
    3%
    16%
    16%
    16%/10%
    16%
    16%
    18%
    16%/16%
    16%
    16%
    7%
    10%
    16%
    15%
    16%
    9.5%
    16%
    16%
    19%
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    Disclaimer: Please consult with Four Peaks Planning, Inc. before undertaking any actions. The information in this website is provided with the understanding that the publisher is not engaged in rendering legal, tax or investment advice. While every attempt has been made to provide current and accurate information, neither the author nor the publisher can be held accountable for any errors or omissions. You agree not to hold any employee of Four Peaks Planning, Inc. liable for action you take from the information on www.fourpeaksplanning.com.

    Copyright: Four Peaks Planning, Inc. © 2016 - Last will & testament and revocable living trust estate planning. Serving all of Arizona including Anthem, Chandler, Flagstaff Gilbert, Glendale, Goodyear, Mesa, Payson, Peoria, Phoenix, Scottsdale, Sun City, Sun Lakes, Tempe and Tucson.

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