- Tax Planning
- Investments 1: Before you Invest
- Investments 2: Your Investment Plan
- Investments 3: Securities Market Basics
- Investments 4: Bond Basics
- Investments 5: Stock Basics
- Investments 6: Mutual Fund Basics
- Investments 7: Building Your Portfolio
- Investments 8: Picking Financial Assets
- Investments 9: Portfolio Rebalancing and Reporting
- Retirement 1: Basics
- Retirement 2: Social Security
- Retirement 3: Employer Qualified Plans
- Retirement 4: Individual and Small Business Plans
- Estate Planning Basics
- Introduction
- Understand the Principles of Estate-Planning
- Understand the Importance of Estate Planning and the Goals of Estate Planning
- Understand the Estate-Planning Process
- Know How Trusts Can Be Used to Your Advantage in Estate Planning
- Understand the Importance of Wills and Probate Planning
- Summary
- Assignments
Case Study #2 Answer
A. Calculating your federal estate tax requires calculating your estate tax then subtracting your unified credit. On an estate of $4.2 million, the amount in 2009 would be (from the table):
Amount Above Year Tax on Column A Rate on Excess
$3,500,000 2009 $1,455,800 45%
$1,455,800 + .45 * (4,200,000-3,500,000) = $1,770,800
The unified credit amount in 2009 is 1,455,800
The tax is the difference $315,000
B. Assuming that $2.2 million is held in an irrevocable trust, the taxable estate drops to $2 million, which is below the exemption equivalent of $3.5 million in 2009, so estate taxes would be $0.
