1. Jump to first page 1 Unit 8, part 3 Special Tax Issues in Estate Planning Theodore A. Feitshans Department of Agricultural & Resource Economics North Carolina State University

2. Jump to first page 2 Benefits of a will: Unified Credit n Fully use credit of first spouse to die by placing credit amount in a testamentary trust, income to spouse, remainder to children n Second spouse also fully uses credit amount n Unified credit times two passes to children without any federal estate tax due

3. Jump to first page 3 Estate Tax Applicable Exclusion Amount

4. Jump to first page 4 Maximum Estate & Gift Tax Rates n YearEstate n 200160%* n 200250% n 200349% n 200448% n 200547% n 200646% n 2007-0945% n 2010 Repealed n 2011+60%* u *10,000,000 - 17,184,000, 55% on excess n Gift n 60%* n 50% n 49% n 48% n 47% n 46% n 45% n 35% n 60%* n (5% surtax)

7. Jump to first page 7 Complex Issues n Forms of business organization n Minority/alienation discounts n Special use valuation n Qualified Family Owned Business Interest (repealed) n Installment payment of federal estate taxes n Qualified conservation easement exclusion

8. Jump to first page 8 Special Use Valuation (Code Sec. 2032A) n Reduce valuation of qualifying real property by up to $850,000 for deaths occurring in 2004 (indexed) n Recapture if property ceases to qualify n Reduces stepped up basis