1. I WILL NEVER OWE ESTATE TAXES BECAUSE MY ASSETS ARE WELL BELOW THIS YEAR’S UNIFIED CREDIT AMOUNT.
The unified credit amount which is applicable to your estate is the one in place at the time of your death. Unless your death is imminent, it doesn’t matter what this year’s unified credit is. In the last ten years the unified credit has ranged from $675,000 to $3,500,000. Unless your death is near and certain, you will never know what the unified credit will be at the time of your death.
2. I WILL NEVER OWE ESTATE TAXES BECAUSE MY ASSETS ARE NOT WORTH VERY MUCH.
The estate tax is assessed on the overall fair market value of your assets at the time of death. Fair market value is a price on which a willing buyer and a willing seller would agree. Many people think their assets are worth much less than they really are. The government has its own inflated valuation techniques. You may be surprised to find out that, for estate tax purposes, your assets are worth multiple times what you thought they were.
3. I WILL NEVER OWE ESTATE TAXES BECAUSE I HAVE A LIVING TRUST.
Keeping property in a living trust and out of your probate estate does absolutely nothing to avoid this property from coming into your taxable estate. Assets in a living trust are just as subject to income and estate taxes as if you owned them directly. To accomplish estate and income tax savings, a variety of more complicated strategies must be used.