Do You Know the Value of Your Estate?
It can be difficult to plan for the distribution of your wealth without knowing the value of your estate. Yet many people don't realize what their assets are worth. Here's how to put your financial house in order.
Step 1: Inventory Your Assets
- Your home, land and other real property
- Stocks and bonds
- Cash, including savings accounts and CDs
- Tangible personal property (including autos, jewelry and antiques)
- Assets in which you have an income interest (such as an annuity)
- Retirement accounts
- Equity/ownership interest in businesses
- Life insurance
Ownership generally falls into the following three categories: sole, joint or tenancy in common. Owning an asset with your brother is different from a tax perspective than owning an asset with your spouse. Also, married couples living in community property states have additional record-keeping requirements.
Step 3: Add Up Your Debts
What you owe is subtracted from the value of your assets at your death. The most common debt is a mortgage on a primary residence or vacation house. But credit card balances and other loans are also calculated here. In addition, your estate will incur legal fees and other expenses that will reduce the amount subject to taxation.
Step 4: Calculate Your Gifts
A $50,000 gift, for example, to your child to get a business started or to help with a first home's down payment is a taxable gift. Even though you may not have actually paid any out-of-pocket gift tax on the transfer because of the $5.25 million gift tax–exempt amount in 2013, you must keep track of the gift to calculate any potential estate tax in the future.
Once you know how much your estate is worth you can better plan for the distribution of your assets. To learn how you can easily support our important work through your estate, please contact Susan Shattuck at 480-941-3507 or firstname.lastname@example.org.
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The information on this website is not intended as legal or tax advice. For legal or tax advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes apply to federal taxes only. State income/estate taxes or state law may impact your results.