oklahoma city estate and inheritance taxes

OKLAHOMA CITY ESTATE AND

INHERITANCE TAXES - PART 2

“In our previous discussion on estate and inheritance taxes in Oklahoma and Kansas, we looked at some basic issues that everyone should understand about these important

topics.”

By Larry Parman OKLAHOMA ESTATE PLANNING ATTORNEY

http://www.parmanlaw.com/

Oklahoma City Estate and Inheritance Taxes - Part 2 www.ParmanLaw.com 2

Today we are going to expand on those ideas to take a look at some more specific

strategies or planning options that might allow you to reduce, and potentially

even eliminate, any estate or inheritance tax issues you might be facing.

As we mentioned previously, most people who create estate plans in Kansas and

Oklahoma will not have to worry about any potential inheritance tax issues

because Kansas, Oklahoma, and the federal government do not impose these

taxes. Instead, our discussion today will focus on the federal estate tax because

that is the single most important tax issue facing people creating an estate plan.

Nevertheless, you always need to talk to your attorney about potential

inheritance tax issues that might apply to you if you own property or inherit

property located in other states.

EXEMPTIONS


The single most important step in determining whether you need to use an

estate tax planning tool is determining whether the federal estate tax will apply

to you at all. The federal government allows each individual to exempt a specific

amount of property from the estate tax. What this means is that should you die

leaving behind an estate worth less than the exemption amount, your estate will

not pay a single penny in estate tax. Furthermore, because of a new rule known

as portability, married couples can combine their individual exemptions

together, allowing them to effectively double the amount of property that is free

from estate tax.

The amount of the individual exemption differs every year because of inflation,


and can change with new laws, but for people who die in 2016, the federal

government allows a $5.45 million individual exemption or $10.9 million

combined marital exemption.

Gifting

For people who have estates in excess of

the individual or marital exemption

amounts, the first step in creating an

effective estate tax plan often is developing

a sound gift giving plan. The federal

government allows individuals to give up

to $14,000 per year per individual as non-

taxable lifetime gifts. What this means is

that you can give each person you know up

to $14,000 per year and effectively remove

that money from your estate without

incurring any tax. If you are married, both

you and your spouse can give $14,000 to

each individual, effectively allowing you to

give up to $28,000 per year per individual as lifetime gifts.

Why would you do this? Think of lifetime gifts as inheritances you give while you

are still alive. Instead of waiting to give them as part of your estate when you die,

and possibly incurring an estate tax penalty, you give them as lifetime gifts and

reduce the size of your estate for tax purposes.


IRREVOCABLE TRUSTS

If gift-giving plans are not enough to reduce or eliminate your estate bill, there

are a variety of irrevocable trusts that might help. While you need to speak to

your attorney about what each kind of trust can do and how you can create or

manage it, they all work in basically the same way.

An irrevocable trust is like a corporation in that it can exist as an independent

legal entity and own property in its own name. Once you transfer some of your

property into the trust's name, that property will no longer be counted against

you when it comes time to determine the size of your estate.

So, with the proper kind of irrevocable trusts, you can effectively reduce the size

of your estate by almost any amount, and thus reduce your exposure to the

estate tax.


BEYOND SIMPLE PLANS

Estate tax issues are complicated, and often involve tools that take a lot of time

and effort to create and implement properly. Beyond the simple tools we have

discussed here, your attorneys can tell you about a variety of other estate

planning tools that might help you reduce or eliminate any potential estate tax

bill.

As with any financial or tax issue, the laws surrounding estate tax can change at

almost any time. Not only that, but because of the complexity of these issues,

you need to create your estate plan with the advice and guidance of your

attorney, and then be prepared to update or modify that plan as your

circumstances and laws change.


The attorneys and staff at Parman & Easterday have years of experience

assisting our clients with estate tax issues.

Contacting us to set up a Discovery Consultation to visit about your concerns is

the best way to ensure you have done everything you can to protect yourself,

your property, and your loved ones.


About the Author Larry Parman

After helping his own family deal with a lengthy probate and a battle with the IRS following his father’s death in a farm accident, Larry made a decision to help families create effective estate plans designed to reduce taxes, and minimize legal interference with the transfer of assets to one’s heirs, and protect his clients’ assets from predators and creditors. Following a dozen years in the investment banking and financial services business, in the mid-1980s Mr. Parman formed a law firm that gives families the peace of mind that comes from having created a premier estate and financial plan. After forming his law firm in 1984, he offered a series of public and private seminars to inform the public about using a Living Trust as the foundation of a family’s estate plan. Today, Parman & Easterday is one of the leading business

and estate planning law firms in the Midwest. The firm’s primary focus is on business and estate planning, elder law, asset protection, and providing effective estate planning solutions for clients. Today, the firm’s premier estate plan design is referred to as a Legacy Wealth Plan. Mr. Parman is a frequent guest on the radio and can be seen on television talk shows explaining the importance of proper estate planning. Prosperity Productions selected Mr. Parman as a featured speaker in a nationally-recognized educational video on Living Trusts. He is the author of numerous published articles on financial and estate planning matters and the co-author of two books, Estate Planning Basics: A Crash Course in Safeguarding Your Legacy and Guiding Those Left Behind in Oklahoma: Settling the Affairs of Your Loved Ones. Mr. Parman is a member and Fellow of the American Academy of Estate Planning Attorneys. He is also a member of the Oklahoma and Missouri Bar Associations, the American Bar Association, and the Oklahoma City Estate Planning Council.

www.ParmanLaw.com

OVERLAND PARK, KS 10740 Nall Avenue, Suite 160 Overland Park, KS 66211 Phone: (913) 385-9400 Fax: (913) 385-9422

OKLAHOMA CITY, OK 13913-B Quail Pointe Drive Oklahoma City, OK 73134 Phone: (405) 843-6100 Fax: (405) 917-7018

