FAQ:

If I am married, is the amount that my spouse and I can pass tax free automatically doubled?

No. Think of the applicable exclusion amount as a tax-free coupon. The coupon is worth $1.5 million in 2005 and rises to $2 million in 2006. This tax-free coupon is non-transferable and must be used at the time of your death. If you leave your entire estate to your spouse, there will be no taxes due at your death, but you will have failed to use your tax-free coupon. Consequently, upon the death of your spouse, there is only one tax-free coupon available to shelter the entire remaining estate from taxation. If you direct that your assets, up to the value of your coupon, be left in trust for your spouse and subsequent beneficiaries, you and your spouse are able to utilize two tax-free coupons. This simple estate tax planning strategy effectively allows you and your spouse to shelter up to $4 million in 2006, which would provide a tax savings of $920,000 if both spouses were to die in that year.

Back To Frequently Asked Questions