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Federal Estate Tax Planning

The federal estate tax is a tax on the transfer of an estate at death. To eliminate the burden of the estate tax on the majority of estates, the federal government provides that no tax will be due unless the value of the taxable estate exceeds a certain threshold on the date of death. This threshold is referred to as the Applicable Exclusion Amount. Estate taxes are assessed on all assets that exceed the applicable exclusion threshold. Transfers made to either public or private charities are not subject to estate tax. Furthermore, most transfers made to a surviving spouse qualify for an unlimited marital deduction, which has the effect of delaying the estate tax until the death of the surviving spouse. In general, estate planning and wealth transfer planning are both necessary if a person’s assets total more than the current applicable exclusion amount in any given year.