Estate Plan

Did You Know . . .

Estate tax rates may be as high as 40% in 2013.  "So what", you may be thinking; you are still accumulating assets and don't consider yourself wealthy enough to have an estate tax problem.
You might be pleasantly surprised to learn that your estate is larger than you thought and, with proper planning, you may be able to keep it intact for your heirs.
The Value of Your Estate
Your estate basically consists of everything you own minus everything you owe. In business terms, it's assets minus liabilities, which produces your net worth.
There are many items making up your estate, including:

  • Cash, CDs, mutual funds, stocks, bonds, etc.

  • Other real estate at current market value.

  • Personal property (e.g., boat, jewelry).

  • Your share of jointly held property.

  • Value of a business interest.

  • Life insurance and annuities.

  • Any inheritance you may receive.

  • Retirement plan benefits.

  • Your share of community property.

After subtracting debts (mortgage loans, other loans, bills, credit cards and uncollected judgments), past due income and property taxes, you arrive at your net worth. Like most people, you will want to pass along as much of that amount as possible. Unfortunately, the IRS will tax you for the privilege of transferring your wealth to heirs.
Estate Settlement Costs
Under the “Tax Relief, Unemployment Insurance Authorization, and Job Creation Act of 2010” (“2010 TRA”), which was enacted on December 17, 2010, and the American Taxpayer Relief Act of 2012 (“ATRA”), which was enacted on January 1, 2013, the highest estate tax rate is now 40% and the exemption amount has been permanently increased to $5 million, subject to inflation adjustments ($5,250,000 in 2013). A taxable estate is your gross estate less your probate expenses, court costs, executor’s commissions, legal and appraisal fees (these can run as high as 10% to 15% of your estate).  Tack on state inheritance taxes, if applicable, and the actual value of your estate can shrink significantly.

The IRS does offer some relief. The federal estate tax contains an unlimited marital deduction which provides that qualifying transfers to a surviving spouse (if a U.S. citizen) are deductible from your estate. So, if you leave property in an appropriate form to a surviving spouse, there will be no federal estate tax liability on that property at your death. Property to a spouse who is a non-citizen can be protected too, if it is in a Qualified Domestic Trust (QDT).
You will have deferred the estate tax. But it will have to be addressed later. Why not plan now?
Planning Is The Key
Generally speaking, a well-planned estate will incur less costs and less overall shrinkage. Proper planning certainly could have helped Elvis Presley. His estate shrunk an astounding 73% because of debts and taxes.

Total costs include debts and $2,785,585 in federal estate tax.
Life insurance also could have helped. Unfortunately, there was only $63,660 of life insurance on his life in his estate.
There are four possible ways to provide for estate expenses.

1. Cash or liquid assets

2. Selling assets

3. Borrowing

4. Life insurance
Looking At Life Insurance
Life insurance can be a cost effective way of paying estate expenses. It will generally pay an income tax-free death benefit and allow your family to keep the value of your property. The uncertainties of borrowing (who will provide the loan and at what rate) will also be avoided.
Consider these advantages of life insurance:

  • It can free up other assets earmarked for estate liquidity needs.

  • It may prevent a forced sale of assets.

  • Proceeds of life insurance are generally free from federal income tax and, with proper planning, may be free from federal estate tax.

  • In some states, properly arranged life insurance may escape state death taxes.

If you would like to know more about how life insurance might be used to help pay estate taxes, ask your New York Life agent, Izhak Asher, to provide a preliminary analysis.
Neither New York Life nor its agents are in the business of providing tax, legal or accounting advice. You should consult with your professional advisors for tax, legal or accounting advice.

Presley’s Gross Estate $10,165,434

Total Costs* $7,374,635

Net Estate $2,790,799

Shrinkage 73%


Izhak Asher is an agent of and licensed to sell insurance through New York Life Insurance Company and may be licensed with various other independent unaffiliated insurance companies in the states of AZ, CA (CA Insurance License #0K37643), CO, CT, FL, GA, IN, MA, MD, NC, NJ, NV, NY, OH, PA, SC, TX, VA, WA, and WV. No insurance business may be conducted outside the states referenced.

Izhak Asher is a Registered Representative of and offers securities products & services through NYLIFE Securities LLC, Member FINRA/SIPC, a licensed insurance agency, and a wholly-owned subsidiary of New York Life Insurance Company, 520 Broadhollow Rd, Melville, NY, 11747, 631-391-5806. In this regard, this communication is strictly intended for individuals residing in the states of CA, NC, NJ, NV, and NY. No offers may be made or accepted from any resident outside the specific states referenced.

Izhak Asher is a Member Agent of The Nautilus Group®, a service of New York Life Insurance Company.

The Million Dollar Round Table (MDRT), The Premier Association of Financial Professionals®, is recognized globally as the standard of excellence for life insurance sales performance in the insurance and financial services industry.

Neither New York Life Insurance Company nor its agents or affiliates provide tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.​