W. Wells wrote:
- quote -

Here is my limited understanding of the issue. Don't rely on what I
say though; If you have enough money to have estate tax issues it is
definitely worth the money to hire a estate planning attorney and do
things right!

Under the Federal Estate Tax rules, each individual gets an exemption
(I think the limit is around $1 million, but don't hold me to that)
that allows him to pass along a certain amount of money free of the
estate tax. Also, there is a seperate unlimited exemption to the
estate tax for money that goes to a spouse.

Now apply those two rules to some facts. Lets say you have husband and
wife and child, and they have assets worth $4 million.

Scenario 1: Husband and wife own everything jointly. Husband dies
everything goes to wife automatically, and there is no estate tax
because the transfer was between spouses. Then wife dies and leaves
everything to child. The first million is tax free, but the remaining 3
million is taxed.

Scenario 2: Husband and wife split ownership of their assets, so they
each own 2 million individually. Husband dies and leaves 1 million to
child tax free, and the remaining million to wife tax free. Then wife
dies and leaves 1 million to child tax free, and the remaining 2
million is taxed.

Under Scenario 1 the estate tax is paid on 3 million, under Scenario 2
the estate tax is paid on 2 million. Child ends up with a lot more
money under Scenario 2.

Andy

On Fri, 11 Nov 2005 10:33:52 -0600, "W. Wells" <otf70[at]nc.rr.comwrote:

- quote -

No. The purpose of splitting up your assets into individual names is
so at the death of the first of you to die, the decedent's will
bequeaths property into a credit shelter trust. This can only be done
with property owned individually; jointly held property passes to the
survivor by operation of law (rather than via testamentary
disposition).

If you leave separately held property to the survivor, the unlimited
marital deduction will protect that transfer from taxation. This
isn't what you want to do. You want to leave $1.5 million (in 2005)
to a trust so that it isn't protected by the unlimited marital
deduction. That $1.5 million isn't taxed because of the $1.5 million
lifetime exemption. By funelling that money into a trust though, it's
not then included in the gross estate of the second to die.

And that's the whole point.

"FranksPlace2" <FranksPlace2[at]gmail.com> wrote in message
news:1131979894.268952.48160[at]g47g2000cwa.googlegroups.com...
- quote -

Each state's community property laws are different, and Louisiana's laws
(all of them - that darn French civil law - may be a bit unusual, so I
can't speak directly to that state. But in California, the split occurs
only for community property. That is, separate property (e.g. property
brought into the marriage and still traceable, property gifted to an
individual after marriage and still traceable, etc.) remains wholly in one
estate.

I can't imagine other C/P states being different in this respect, but I've
never checked.

--
Mark Freeland
nNeEwTs[at]sonic.net

If you live in a community property state, such as Louisiana, the split
is automatically done for you.

Frank

You can save on estate taxes for the same reasons that the couple dying
together gain. Expect that the final estate tax exemption will come in at
1.5 million, congress has to do something prior to 2010. splitting the
estate will keep you out the federal tax and given what state you live in
save there as well.

"W. Wells" <otf70[at]nc.rr.com> wrote in message
news:0r3df.3804$bU3.1086318[at]twister.southeast.rr.com...
- quote -

Is there an advantage to splitting ownership in an estate between husband
and wife while both are still living? I know you can split $2 million and
save on estate taxes if both die at the same time, but is there an advantage
if one dies and the other gets the whole estate anyway?