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What are personal and marital estate tax exemptions?

When developing your estate plan, it is important to understand the all of the exemptions and protections you can use to keep your property safe from costly challenges and taxation. With careful planning, you can use many legal tools to create protections for your property and your beneficiaries. For those with substantial estates, it is important to understand two of the most widely used protections: the personal exemption and marital deductions from the estate tax.

The personal exemption allows an individual to protect a significant amount of his or her assets from the estate tax upon death. In 2017, the cap moved up to $5.49 million dollars per individual, but often shifts upward. It is also worth noting that the Trump administration regularly indicates it may attempt to eliminate the estate tax altogether, but the tax does apply for the time being.

The marital deduction to the estate tax allows a person to pass directly to his or her spouse upon death without taxation. It is wise to note that this exemption only applies to spouses who are U.S. citizens, and the estate must pass directly to the spouse instead of through some other method.

If you have concerns about the state of your assets and the steps you have or have not taken to protect them, you should consider creating an estate plan as soon as possible. Whether or not your personal estate exceeds the threshold for the estate tax, which is hefty, you must contend with numerous other taxes and various processes that may deplete your estate significantly. Proper estate planning can offer you peace of mind and give you the freedom to focus on the ones you love and the legacy you hope to leave behind.

Source: FindLaw, “Estate and Gift Tax: An Overview,” accessed April 13, 2018

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