“Unified Credit” Estate Planning Not Automatic in Virginia

Estate tax changesThe unified credit is an opportunity every individual has to pass property to the next generation free of estate tax. Currently the unified credit is $5.34 million.

With nothing but hand tools you can build a house, and with nothing but the “unified credit” you can build a mighty impressive estate plan. This is the message of an article in Forbes.  The article, titled “The Unified Credit Freeze, Not the Philly Freeze” is one you may want to keep.

If you are not familiar with the term “unified credit,” it is the federal tax exemption given to every taxpayer for use against gift and estate taxes.  You get one “unified” exemption amount to be applied in life against lifetime gift taxes, at death against the dreaded estate tax, or against some of each.

At present the credit is pegged at a fairly nice $5.34 million, or $10.68 million for married couples. While this is cause for celebration for more than most taxpayers, whether married or single, there still is estate planning to be done.  The article addresses “traditional” estate planning for married couples through revocable living trusts, which then create “credit shelter trusts” and “marital trusts” upon the death of the first spouse. The article does not address the new “portability” option for estate tax minimization.

The basic teaching point of the article is to follow through on your estate planning and do not become complacent, especially if your overall marital estate exceeds the maximum exemption amount. Unpleasant and otherwise avoidable estate taxes could be triggered.

You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning.

Reference: Forbes (May 11, 2013) “The Unified Credit Freeze, Not the Philly Freeze



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