ESTATE TAX VS. INHERITANCE TAX

What is the difference between estate tax and inheritance tax?

Estate tax is that owed and payable by the estate.  The federal government applies an estate tax to estates over $5.43 million for 2015 (this amount is indexed and is scheduled to increase every year).  For states that impose an estate tax (most do not, including California), the residence of the decedent determines whether or not state estate tax will apply.

WHAT IS ESTATE PLANNING? (PART III – OTHER ESTATE PLANNING TOOLS)

As noted, wills and trusts are the most common estate planning tools, but are far from the only tools.  Depending on family dynamics, estate size and composition, a client may also want to engage the following.

FAMILY LIMITED PARTNERSHIPS AND LLC’S

For families that own significant assets such as rental property or operate small businesses can benefit from the use of entities such as family limited partnerships (FLPs) or family limited liability corporations (LLCs).  These entities provide several benefits for parents and subsequent generations.