A Well-Crafted Estate Plan Can Be A Wonderful Gift
to Leave Your Heirs.

It can help ensure that the wealth you have accumulated passes to the people you have selected and in the manner you have chosen.

Additionally, while you cannot prevent estate taxes and administrative costs from being charged to your estate, you can take steps to minimize your estate's erosion through proper analysis and the implementation of a thorough estate plan.

Unless you plan for estate taxes, the result can be a hefty tax bite, and perhaps an unnecessary one. For example, the chart below contains some names that you may recognize. It shows the amount of their gross estate, their settlement costs and the amount of shrinkage after estate and settlement costs were imposed.

Often the effects of improper planning for estate taxes are learned the hard way, as in the cases illustrated above. That is why a properly designed estate plan is essential for the protection of your family.

There are steps you can take to lessen your estate tax burden. Today, every estate owner is entitled to a unified credit, which permits up to $1.5 million of assets to pass free of estate tax. Under the Economic Growth and Tax Relief Reconciliation Act of 2001 tax law, the estate tax unified credit amount will increase in stages to a maximum of $3,500,000 in 2009.(Note: This new law complicated the estate-planning process by virtue of its "sunset" provision. Under this provision, in 2011, the rules revert to those previously in place, possibly increasing estate tax exposure!) (Click here to view the Gift and Estate Tax Unified Credit charts below for scheduled increases.) Accordingly, if your total taxable estate is $1.5 million or less, there will be no federal estate tax due. (Note: The gift-tax exclusion amount is $1 million.)

An estate owner can also utilize the unlimited marital deduction which permits married individuals to transfer assets to their spouses during their lifetime or upon death, without incurring any federal estate tax. But if you have more than $1.5 million of assets to leave, giving them all to your spouse will "waste" your $1.5 million exemption.

With proper planning, a husband and wife can shelter $3 million from federal estate tax through the year 2005. $3 million may sound like a lot of money and beyond your reach but you may be worth much more than you think. Keep in mind that the gross estate includes all property of any description (personal property, real estate, life insurance, business interests, etc.) and in any location, to the extent you had any interest in the property at death. It may even include property that was given away or over which you had no control at the time of death.

So, if your total estate value at death exceeds $3 million, you may face estate taxes up to 47%. (Click here to view the 2005 Gift and Estate Tax Table below so you can get a quick idea of how much tax you will owe or click here to reach our Estate Tax Planning Calculator .)

One viable option for neutralizing the negative effects of estate taxes is to purchase life insurance. Through the use of a single or second-to-die life insurance policy you can establish the funds needed to help pay taxes for the estate, rather than from the estate.

In the hypothetical example below, proper estate planning results in heirs receiving over $3,000,000. This scenario reflects the purchase of an insurance policy in the amount of $750,000, proceeds of which are not included in the decedent's estate.

The Results of Proper Estate Planning* Gross Estate: $3,000,000 (assumed year of death 2005)
In this hypothetical example, proper estate planning results in heirs receiving over $3,000,000.	*Note: This presentation is about the need to plan. The information presented is general in nature and is not intended to apply to a specific situation. Before employing any techniques, consult with your professional advisors. The “after-planning” scenario reflects the purchase of an insurance policy in the amount of $750,000, proceeds of which are not included in the decedent’s estate.

For a married couple, it may be most beneficial to purchase a second-to-die life insurance policy. In addition to establishing funds to help pay the estate taxes, with a second-to-die life insurance policy you are able to:

• Insure two lives under one policy with the benefit paid at the death of the surviving spouse, when estate liquidity is needed most.
• Pay lower, more affordable premiums for combined coverage rather than paying premiums for two separate individual policies.
• Plan your estate to add substantially to the inheritance of your beneficiaries.

The skilled professional life insurance representatives of Security Mutual Life can help you devise an estate plan suitable for your needs. Together with you and your other professional advisors, we can help determine which techniques can most effectively accomplish your goals and minimize the effect of state and federal taxes. Legal Notice

For more information on Estate Planning–Click here to visit our planning library.

Estate Tax Unified Credit
Year	Exclusion Equivalent	Unified Credit
2005	$1,500,000	$555,800
2006-2008	$2,000,000	$780,800
2009	$3,500,000	$1,455,800
2010	Repeal	Repeal
2011+	$1,000,000	$345,800

IRC Sec. 2010(c), as amended by EGTRRA 2001.

Gift Tax Unified Credit
Year	Exclusion Equivalent	Unified Credit
2005-2009	$1,000,000	$345,800
2010	$1,000,000	$330,800
2011+	$1,000,000	$345,800

IRC Secs. 2505(a), 2010(c), as amended by EGTRRA 2001.

Visit our Federal Estate Tax Estimator and/or the chart below to estimate how much tax you will owe.

Below we have provided the 2005 Gift and Estate Tax Table so you can get a quick idea of how much tax will be owed
Taxable Estate/Gift
Over	to	Tax Equals*	Plus %	Of Excess Over
$0	$10,000	$0	18	$0
10,000	20,000	1,800	20	10,000
20,000	40,000	3,800	22	20,000
40,000	60,000	8,200	24	40,000
60,000	80,000	13,000	26	60,000
80,000	100,000	18,200	28	80,000
100,000	150,000	23,800	30	100,000
150,000	250,000	38,800	32	150,000
250,000	500,000	70,800	34	250,000
500,000	750,000	155,800	37	500,000
750,000	1,000,000	248,300	39	750,000
1,000,000	1,250,000	345,800	41	1,000,000
1,250,000	1,500,000	448,300	43	1,250,000
1,500,000	2,000,000	555,800	45	1,500,000
2,000,000	----	780,800	47	2,000,000
* Less current Unified Credit (see Estate Tax Unified Credit Table above). Gift taxes previously paid will affect the final calculation. Be sure to consult your accountant or financial advisor.
IRC Secs. 2001(c), 2502(a), 2210, as amended by EGTRRA 2001.