HOW TO MINIMIZE YOUR FEDERAL ESTATE TAXES

By:  Robert J. Myers, Esq.

Federal estate taxes can take a big portion of what you leave to your heirs. To lower federal estate
taxes, you may want to reduce the value of your estate as much as possible before you pass on. 
The following tax-effective strategies can be used by you to transfer more of your property to your
heirs.

          I.       Fully Utilize Your Unified Tax Credit.

You are entitled to pass along $2.0 million worth of property to your heirs tax-free. When utilized
properly, this credit could double to $4.0 million for a married couple. However, you may miss out
on this double advantage if you leave everything to your spouse.
                  
Instead, it may be prudent to consider establishing a bypass or living trust in which you transfer
$2.0 million in assets to be held and managed by a trustee. These assets can remain in trust with
all income generated going to the support of the surviving spouse. Upon the death of the second
spouse, the assets would then be distributed tax-free to your named beneficiary(ies). In addition,
the second spouse's estate up to $2.0 million would pass along tax-free. For this strategy to work,
each spouse must own some assets in his or her name.

          II.      Start Lifetime Tax-Free Gifts Now.

Current law allows you to give up to $12,000.00 free of federal gift tax annually to as many
individuals as you like. The gifts can be cash, vehicles, stocks and real estate. If you are
considering giving gifts to minors, such as your grandchildren, the asset(s) should be placed in trust for future use when the minor reaches legal age or at some later age you designate.

          III.     Transfer Ownership Of Life Insurance Policies.

If a life insurance policy is in your own name upon your death, the proceeds of that life insurance
policy will be included in your estate for federal estate tax purposes. A better alternative may be to
have ownership of any existing life insurance policies transferred to an irrevocable life insurance
trust or purchase new policies in the name of an heir or an irrevocable life insurance trust.

          IV.     Give To Charity.
                  
Establishing a charitable remainder trust allows you to set aside assets now for a charity upon your death. In addition to reducing the taxable size of your estate, you will receive any income
generated from the charitable remainder trust, plus an income tax deduction for the charitable gift.  

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Robert J. Myers is managing attorney of the Estate and Trust Division of  Maney l Gordon P.A.,
located at 1135 Pasadena Avenue South, Suite 140, St Petersburg, Florida. The telephone number is 727-347-5131. Mr. Myers welcomes calls regarding these articles and other related legal topics.  This column outlines general legal principles and is not intended to give you legal advice. 
If you have a specific question about the law, please consult an attorney.