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Accounting Information > Other Types of Accounting > Estate Planning
Estate Planning

Estate planning is the strategy used to attempt to eliminate or minimize any estate tax that would be due upon your death. Even a basic estate plan can guarantee that your family is taken care of and your financial goals are met after you are deceased. The basic elements of a simple estate plan are a will, an assignment of power of attorney, and a living will or medical power of attorney. Some people may add a trust to the mix. Both federal and state laws must be considered when preparing your estate plan.


The first step in estate planning is usually to take an inventory of all your assets. These include your real estate, business interests, bank deposits, securities, investments, retirement savings, insurance policies, interests in trusts or jointly held property, and certain personal property such as works of art. Once you have your inventory or listing of assets, you need to assign a value to each of the assets.

If you want to estimate what your estate tax would be, you can complete Form 706, the estate tax return. If you have not made any taxable gifts in your lifetime, the form is very simple to complete. The beginning point is the market value of the property in your estate, which is called the gross estate. Certain deductions are then subtracted from the gross estate. A marital deduction is allowed for all bequests to a surviving spouse as long as they are a U.S. citizen. Also deductible are administrative costs for the estate. The amount after the deductions is called the taxable estate. A unified credit and other credits are subtracted from the calculated tax on the taxable estate.

If you have made taxable gifts, it is a bit more complicated to estimate your estate tax. The estate tax and gift tax are cumulative, which means the tax rate is applied to the total of your taxable estate and any taxable gifts made after 1976. The tax computed on these two amounts is then decreased by the amount of gift taxes payable on gifts made after 1976. Then the unified credit and any other applicable credits are subtracted from the remainder.

It is very important to have a will, to express your decisions on where you want your assets to end up when you die. A trust is a legal mechanism that lets you say when your assets will be distributed after you die. It also helps you to reduce your estate and gift taxes, and to avoid probate court. It is always a good idea to discuss your estate plans with your heirs. This will make your wishes clear, and should prevent possible disputes after your death.

Are you looking for someone to help you with your tax accounting, general accounting, cost accounting, auditing, or bookkeeping needs? Do you need someone to help you with estate planning? You have come to the right place! Try the CPA search feature on this website to find a qualified professional in your area to help you with all your tax and accounting needs.

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