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Group Title: Circular - University of Florida Institute of Food and Agricultural Sciences ; 403
Title: Some pointers about estate planning
CITATION THUMBNAILS PAGE IMAGE ZOOMABLE
Full Citation
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Permanent Link: http://ufdc.ufl.edu/UF00067223/00001
 Material Information
Title: Some pointers about estate planning
Series Title: Circular
Physical Description: 1 folded sheet : ill. ; 23 x 50 cm., folded to 23 x 10 cm.
Language: English
Creator: Holt, John, 1936-
Greene, R. E. L ( Robert Edward Lee ), 1910-
Florida Cooperative Extension Service
University of Florida -- Institute of Food and Agricultural Sciences
Publisher: Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida
Place of Publication: Gainesville Fla
Publication Date: 1975
 Subjects
Subject: Estate planning -- Florida   ( lcsh )
Inheritance and transfer tax   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
non-fiction   ( marcgt )
 Notes
Statement of Responsibility: John Holt and R.E.L. Greene.
General Note: Cover title.
General Note: "7-5M-75."
Funding: Circular (Florida Cooperative Extension Service) ;
 Record Information
Bibliographic ID: UF00067223
Volume ID: VID00001
Source Institution: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: oclc - 51253472

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HISTORIC NOTE


The publications in this collection do
not reflect current scientific knowledge
or recommendations. These texts
represent the historic publishing
record of the Institute for Food and
Agricultural Sciences and should be
used only to trace the historic work of
the Institute and its staff. Current IFAS
research may be found on the
Electronic Data Information Source
(EDIS)

site maintained by the Florida
Cooperative Extension Service.






Copyright 2005, Board of Trustees, University
of Florida





may become incompatible and
the business.
re individually liable for busi-
d debts incurred by the other

ship may be terminated by the
1 of any partner.
re ineligible to participate in em-
ge benefits.
e no written specifications of
responsibilities.




new corporation creates another
y. Thus, the powers-that-be sel-
m. Corporations are legal entities
hold and transfer property and
esses in their own names. They
e rights of an individual.
ome unique characteristics of cor-
it:
liability. An owner is only liable
s up to the amount of his member-
ity. That is, unless he has signed
al note to enable the corporation
w money.
ty of existence which permits the
on to exist and conduct business
regard to the health of its share-

y to transfer ownership by buying
ng shares without interfering with
ation of the business.
on can provide access to some im-
benefits. Employee life insurance,
ce and retirement programs can be
iness expenses for corporate em-
ough they may be the stock own-

S corporations permit stockholders
orate earnings or losses as their
ing paying "double" taxes on cor-
Even so, the relative merits of
ubchapter S corporations must be
ed. It is not rare for a Subchapter
to become a regular (Subchapter


Besides the incorporation costs and the extra
accounting required, there is one especially im-
portant warning about incorporation. A minority
stockholder's interest may not be readily market-
able.

Summary
Objectives in estate planning will vary. The
first step is to determine those objectives. Then
professional help can and should be employed to
tailor a plan to fit your own situation. The serv-
ices of legal, accounting, financial and appraisal
professionals may be required.
Even though minimizing taxes is important in
estate planning, one should always ask himself,
"Would I set things up this way if there were no
tax saving?" A sound estate plan is based on
personal and family objectives and solid business
operation principles.
The question is not whether you can afford an
estate plan. It is a question as to whether you
can afford to be without an estate plan prepared
by your lawyer.





.0


This public document was promulgated at an
annual cost of $348.00, or 3.48 cents per copy
to inform individuals on estate planning.


11-10M-75


Single copies free to residents of Florida. Bulk rates
available upon request. Please submit details on
request to Chairman, Editorial Department, Institute
of Food and Agricultural Sciences, University of
Florida, Gainesville, Florida 32611.


COOPERATIVE EXTENSION WORK IN AGRICULTURE AND HOME ECONOMICS
(Acts of May 8 and June 30, 1914)
Cooperative Extension Service, IFAS, University of Florida
and United States Department of Agriculture, Cooperating
Joe N. Busby. Dean


Circular 403


Some

Pointers


About


University of Florida I

























SOME POINTERS ABOUT
ESTATE PLANNING

John Holt and R.E.L. Greene
"A farmer lives poor and dies rich."
Old West Texas Proverb
Estate planning is the name we commonly
give to the process of providing ways and means
of preserving and disposing of assets and the in-
come therefrom. Unfortunately, most of us have
a mental block against this type of planning be-
cause we associate it with dying.
The best cure for that idea is to realize that
an estate plan is just another facet of a properly
managed business. Besides guaranteeing the
final disposition of assets, proper planning can be
an aid in managing assets during the lifetime of
the owner.
A word of warning: estate planning can be a
complex process. Therefore, the services of a
lawyer are vital. It is also likely that other pro-
fessionals such as accountants, insurance men,
bankers and appraisers will be required.

JOHN HOLT is an Extension Farm Management Econo-
mist in the Food and Resource Economics Department,
Institute of Food and Agricultural Sciences, University
of Florida, Gainesville, Florida.
R.E.L. GREENE is a Professor of Agricultural Econom-
ics in the Food and Resource Economics Department, In-
stitute of Food and Agricultural Sciences, University of
Florida Gainesville Florida.


rs ngs rs
Before hiring any professionals, there are
some things that should be done. Should, that is,
if you intend to make the best use of the profes-
sional's time and your planning money..
You should decide what you want to accom-
plish with an estate plan. Ask yourself:
1) Do you and your wife both have a will?
2) Who should become the beneficiaries of
your estate? What abilities do they have?
3) Do you have a complete inventory of assets
and liabilities?
a) Kinds of property: How they were ac-
quired and what is their current value?
b) What debts are owed?
c) What life insurance is carried? Who
are the beneficiaries?
4) What form of business organization will
most nearly allow you to attain your ob-
jectives?
a) Proprietorship?
b) Partnership?
c) Corporation?
It can be especially important to ask yourself
if minimizing estate and gift taxes is your most
important objective. Or is it more important to
provide an adequate income for the future? Per-
haps it is how to insure the continuation of an
"intact" business as you phase out of the active
management of the business.
Even though tax savings are important, the
guiding principle in estate planning should be:
would you make this transaction if there were no
tax saving?

Potential Tax Bites
We mourn when our skin begins to wrinkle or
our hair to fall out. So, too, do we hate the
thought of us or our heirs having to pay taxes on
the result of our life's work. Accordingly, let's
examine the estate and gift tax rates. True, they
are high, but maybe not as high as you have
heard.

Estate Taxes
An exemption of $60,000 is allowed to all
estate owners. Thus, judicious use of this pro-
vision permits married couple to have an adjusted
gross estate of $120,000 exempt from estate taxes.
Federal estate tax rates are fi: ured on the basis


of the taxable estate, which is the gross estate
less allowable deductions. These tax rates are
graduated from 3 percent on taxable estates of
less than $5,000 to 77 percent on that part of tax-
able estates in excess of $10,000,000. Table 1
shows the amount of gross federal estate tax on
taxable estates of different amounts and tax rates
on excesses.
As an example of how to calculate estate taxes,
an estate valued at $128,000 and having a
$120,000 exemption would have a taxable estate
value of $8,000. To arrive at the tax on this
amount, notice that in Table 1, $150 is charged on
the first $5,000. The excess rate (between
amounts of 5 and 8 thousand) is 7 percent.
Therefore, multiplying the $3,000 excess by 7 per-
cent gives a tax of $210. The tax is thus $150 for
the first $5,000 increment and $210 on the next
$3,000, making the tax $360 on the $8,000 taxable
estate.


Table 1.-Amounts of gross federal estate taxes on tax-
able estates of different amounts and tax rates
on excesses

Tax Tax
rates rates
on on
Amount of excess Amount of excess
taxable Amount (per- taxable Amount (per-
estate" of tax cent) estate of tax cent)
Less
than $5,000 $ 90b 3
5,000 150 7 $ 1,250,000 423,200 42
10,000 500 11 1,500,000 528,200 45
20,000 1,600 14 2,000,000 753,200 49
30,000 3,000 18 2,500,000 998,200 53
40,000 4,800 22 3,000,000 1,263,200 56
50,000 7,000 25 3,500,000 1,543,200 59
60,000 9,500 28 4,000,000 1,838,200 63
100,000 20,700 30 5,000,000 2,468,200 67
250,000 65,700 32 6,000,000 3,138,200 70
500,000 145,700 35 7,000,000 3,838,200 73
1,000,000 325,700 39 10,000,000 6,088,200 77
After allowable exemption.
b Assumes a taxable estate of $3,000.

Florida has an estate tax, but the amount of
the Florida estate tax is credited against the gross
federal estate tax in determining the net federal
estate tax. Thus, the total amount of federal and
Florida estate taxes paid is not increased by the
amount of the Flo i -'- .- -%-


t taxes
One purpose of transferring I
death by gift is to reduce the tt
collected as estate taxes if the gi
made. By the way, gift taxes are
person making the gift. Federal
are only three-fourths of estate ta
to exclusion and specific exemption
wealth can be given tax free duri


Softening the Tax Bi
Some of the more common tax
egies are mentioned below. This si
is only intended to enhance the ide
planning. The professionals me
should be consulted. They can an
"wrinkles" to your plan. The ide
tailor your plan to fit your needs.
require professionals.

Gifts
A donor can give each of his c
persons $3,000 per year tax free.
have any strings attached to it,
a husband and wife can utilize
gifts" to give up to $6,000 annu
their beneficiaries without incurri
In addition to the annual g
exemption of $30,000 is allowed e
out a gift tax being levied. F
married couples the lifetime exem
On gifts between husband and
deduction is also allowable. One-
passes free. By using the $3,000
tion, up to $6,000 may be given
nually without incurring a gift
using any of the $30,000 lifetime
bank accounts, jointly owned U
bonds and land owned in joint t
permissible gifts, however.

Marital deductions
A marital deduction may be us
estate tax bill. A husband may
wife at his death (or vice versa)
of his estate free of Federal estate
the marital deduction can be most
lized by equalizing the taxable es
an' i-




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