If you would like to safeguard your wealth for your next generation, it’s better to deal with the estate taxes in a smart way. For this reason, tax liability arising from your wealth should be your main concern. You can use our free estate tax & probate calculator for such safeguard because it can compute the value of your estate & determine the estimated estate taxes for the forthcoming years as well.
Estate tax : How to Calculate Your Estate Tax Liability?
You should look up with your tax consultant to be informed about the federal estate tax rate and the exemptions amount on estate tax for current year. There are some other provisions regarding estate tax calculation such as unused spousal exemption; which will help you to determine the actual tax liability considering all allowable exemptions. It is important to note that unused spousal exemption is not considered in this estate tax planning calculator.
What is your potential estate tax liability?
Exemptions and Maximum Tax Rates are subject to the current year’s Federal Income Tax rules & regulations. You can take information about Exemptions and Maximum Tax Rates from Federal Tax Authority.
You need to check the box if you are “Married”. Therefore, if you are married, you need to enter an amount of wealth that you are going to transfer to your spouse at the time of your death.
Transfer to spouse
Transfer to spouse is a good mechanism to reduce your estate tax amount. Because transferred assets to surviving spouse is not subject to estate tax. Using this calculator you can easily enter the amount of your assets transferred to your spouse.
Used gift exemption
At the time of your death you estate tax exemption would be reduced if you give out huge gifts in your lifetime. Federal Tax System is designed in such a way that you cannot avoid the tax of your wealth. Your used gift exemption will be $0 if you do not gift over $10,000 to anyone other than your spouse and any non-profit organization. The limits of exemptions are indexed to inflation in $1,000 increments in the forthcoming years.‘Used gift exemption’ is the total excess from the previous step. In 2014, gift exemption amount is $14,000 for single person and $28,000 for married couple. These amounts will be adjusted for prevailing inflation in the economy.
Expected inflation rate
It is your expected average long-term inflation rate and can be calculated using the Consumer Price Index (CPI).
Annual asset growth
It is the rate of annual changes in your total assets balance. Enter a positive value when there is any growth in your total asset balance; otherwise enter a negative value.
Annual debt growth
This is the rate of annual changes in your total debt balance. Enter a negative amount when there is any reduction in your total debt balance. Otherwise, enter a positive amount in this calculator.
If you donate your assets to any charitable organization at your death, your estate taxes will be reduced.
It is the cash value of your life insurance policy which insures someone else’s life. You can show this cash value as “Investments” in the assets page. This will increase your estimated asset growth rate.
This is the current value of your home. This value should be closer to the current market value.
Other real estate
This is fair market value of other real estates including any second home, commercial buildings, undeveloped land, rental property etc.