ESTATE PLANNING SAVINGS CALCULATOR

Simply total the items in STEP 1 and STEP 2. Then subtract the item total in STEP 2 from the item total in STEP 1. Finally, take the remaining balance and subtract 6 percent as directed in STEP 3. This number is the approximate loss YOU will suffer without a PYE365 Estate Plan!

Step 1 of 2

50%
  • Estimate the current market value of your Home & other real estate.

Definitions

Estate tax calculation:  For 2015, the estate exemption is $5,430,000 with a top federal estate tax rate of 40%. The new law, like the 2010 law that preceded it, allows an unused spousal exemption to be used by a surviving spouse. For example, if a married couple has an estate of $10 Million, and the first spouse uses $3 million of their exemption when they die, the second spouse is able to pass on $7,860,000 at the time of their death without incurring any estate tax (assuming an exemption of $5,430,000 per spouse). How this rule is applied to current widowers (subject to previously lower exemption amounts) has not been clearly defined. This calculator does not include the impact of an unused spousal exemption.

Exemptions and Maximum Tax Rates:  In 2015 the estate tax exemption is $5,430,000 per spouse. Amounts exceeding the exemption amount are taxed at a rate of 40%. The exemption amount is indexed for inflation for future years. Your exemption is reduced if you have used any gift exemption amount.

Married checkbox:  Check this box if you are married. Checking ‘Married’ allows you to enter an amount to transfer to your surviving spouse at the time of your death. Choosing ‘Single’ disables the transfer to spouse.

Transfer to spouse:  Married couples never have to pay estate taxes on assets transferred to a surviving spouse. In addition, any assets transferred to a surviving spouse don’t count against the estate tax exemption. This calculator allows married couples to indicate how much of their estate will be transferred directly to a spouse. This can be an excellent way to reduce your current estate tax liability, although it may mean a larger estate tax bill in the future.

Used gift exemption:  Large gifts distributed during your lifetime can reduce your estate tax exemption when you die. This can increase your estate tax bill. The tax code was designed this way to prevent wealthy individuals from giving away their entire estate before they die, thus escaping estate taxes. If you have never given a gift over $10,000, other than gifts to non-profit organizations or your spouse, then your used gift exemption amount is $0. In future years, the limits are indexed to inflation in $1,000 increments.

Gift Exemption Amounts
Year Gift Exemption (Single Person) Gift Exemption (Married Couple)
2000 and prior $10,000 $20,000
2001 – 2005 $11,000 $22,000
2006 – 2008 $12,000 $24,000
2009 – 2012 $13,000 $26,000
2013-2015 $14,000 $28,000
2015 and beyond $14,000 plus inflation adjustment $28,000 plus inflation adjustment

If you have given large gifts, you can calculate your used gift exemption as follows:

  1. If you are single, determine if you have ever given over $10,000 in gifts to any individual recipient in a single year prior to 2001, over $11,000 from 2001 to 2005, over $12,000 in 2006, 2007 and 2008, over $13,000 in 2009, 2010, 2011 and 2012, and over $14,000 in any more recent year. If you are married, determine if the combined total of gifts to any individual recipient, between you and your spouse, exceeds double the limit for a single person.
  2. For each recipient and year where you exceeded these limits, calculate the excess.
  3. The total excesses from the previous step is your ‘Used gift exemption.’
  4. You do not need to include amounts that were used to pay for tuition or medical costs as long as they were paid directly to the school or medical organization.For example:You are single and in 2001, gave your son $13,000 and your daughter $13,000. Then in 2002, you gave your son $10,000 and your daughter $15,000. In this case you have three gifts over the limit. The excess of which is $2,000 + $2,000 + $4,000 = $8,000. Your total used gift exemption would be $8,000.

Expected inflation rate:  This is what you expect for the average long-term inflation rate. A common measure of inflation in the U.S. is the Consumer Price Index (CPI). From 1925 through 2014 the CPI has a long-term average of 3.0% annually. Over the last 40 years highest CPI recorded was 13.5% in 1980. For 2014, the last full year available, the CPI was 1.8% annually as reported by the Minneapolis Federal Reserve.

Annual asset growth:  Annual rate you expect your total assets to grow or shrink. Note that this is the average you expect your total asset balance to change, not the interest rate you earn on your assets. If your total asset balance is expected to shrink, enter a negative amount. If your total asset balance is expected to grow, enter a positive amount.

Annual debt growth:  Annual rate you expect your total debt to grow or shrink. Note that this is the average you expect your total debt balance to change, not the interest rate you pay on your debts. If your total debt balance is expected to shrink, enter a negative amount. If your total debt balance is expected to grow, enter a positive amount.

Charitable contributions:  Giving to charitable organizations at your death can reduce your estate taxes. For each dollar that you give away in this manner, your taxable estate is reduced by one dollar.

Life insurance:  Section 2042 of the Internal Revenue Code includes the value of life insurance proceeds insuring your life in your gross estate if the proceeds are payable: (1) to your estate, either directly or indirectly; or (2) to named beneficiaries, if you possessed any ‘incidents of ownership’ in the policy at the time of your death. If either of these conditions are present enter the face amount in the assets page under the heading ‘Life Insurance Policies’.Note: If you own a life insurance policy (with a cash value) that insures someone else’s life, please enter the cash value in the assets page under the heading ‘Investments.’ The cash value increases at your projected rate of return (your asset growth rate).

Home:  Current value of your home. This should be as close as possible to the actual market value of your home. If you have owned your home for a number of years, the current market value could be significantly higher than your original purchase price.

Other real estate:  The value of any other real estate you may own. Include second homes, undeveloped land, rental property or any commercial buildings you may have an interest in. As with your home, use the actual market value of this real estate.

Automobiles:  This is the total value of all automobiles that you own. Do not include any leased vehicles.

Other vehicles:  If you own any other vehicles, such as RVs, campers or collectibles, enter them here.

Jewelry:  The value of any jewelry, gems or precious metals such as gold. If you have owned these items for a number of years, they may have appreciated in price, remember to use the current market value.

Household items:  The value of your household goods and items. This would include items such as furniture, home electronics, silverware, etc.

Checking and savings:  The current total balance of your checking and savings accounts.

Retirement accounts:  The current total balance of your retirement accounts. This should include IRAs, 401(k) savings, SEP IRAs, variable annuities and any other retirement savings you may have.

Savings bonds:  If you own any Savings Bonds, enter the total here.

Bonds:  If you own any Treasury, municipal, or commercial bonds, enter the total here.

Mutual funds:  If you own any mutual funds, enter the total here. Do not include any mutual funds that are in your retirement accounts. They were already included in the ‘Retirement accounts’ line.

Stocks:  If you own any individual stocks, enter the total here. Again, do not include any stocks that are held in a retirement account.

Cash value of life insurance:  If you own a life insurance policy (with a cash value) that insures someone else’s life, please enter the cash value in the assets page under the heading ‘Investments.’ The cash value increases at your projected rate of return (your asset growth rate). Do not include the cash value of life insurance policies insuring your life in this field.

Cash:  If you have any other cash, enter the total here.

Other:  If you have any other assets of value, you can enter the total here.

Home mortgage principal:  This is the current principal balance remaining on your mortgage. This is the amount that you would have to pay to own your home free and clear.

Other mortgage principal:  This is the current principal balance for any other real estate mortgages you may have. This includes mortgages on rental property, undeveloped land, commercial property or any other real estate.

Auto loans:  Total amount you currently have outstanding on your auto loans.

Student loans:  Total amount, if any, that you currently owe in college or student loans. You should enter the total outstanding even if these loans are currently in deferment.

Other loans:  Total amount, if any, of any other loans you may have.

Credit card debt:  Your total credit card debt.

Funeral expenses:  Your total expected funeral expenses. Money used from your estate to pay for funeral expenses is not subject to estate taxes.

Probate percent:  Percent of your remaining estate that will be paid in probate costs. This varies from state to state. Money used to pay probate costs is not subject to estate taxes.