4/26/08 “Moneyline” Recap

April 28th, 2008

On Saturday, April 26, 2008, Seamus Smith was a guest on Peter Newman’s radio show “Moneyline” on KMBZ-980 am. He discussed three types of gifts. The most common gift is the payment of another person’s medical and education expenses, which are not subject to a dollar limitation and are not required to be reported to the IRS (as long as payment of the expenses is made directly to the service-provider). Individuals can also make gifts to any number of people, as long as the total gifts to any single person do not exceed $12,000.00, without triggering any requirement to report the gifts to the IRS. Gifts that do not fit into the first two categories must be reported to the IRS. However, gift tax will not be owed to the IRS until all the reportable gifts made during a person’s lifetime exceed $1,000,000.00. Unfortunately, any portion of the $1,000,000.00 gift exclusion used during your lifetime, decreases the amount that you can leave at your passing without triggering federal estate tax.

One of the primary benefits of making non-reportable gifts is decreasing the size of your estate that is taxable at your passing. If an individual dies in 2008 and their estate, which includes life insurance proceeds, exceeds $2,000,000.00, a tax rate of 45% is imposed on the excess of the estate over $2,000,000.00. In other words, if you have a taxable estate and make a non-reportable gift, 45% of the gift is being funded by the federal government!

Seamus also discussed Kansas and Missouri estate tax laws. If a Kansas resident dies in 2008 and their estate exceeds $1,000,000.00, Kansas imposes a tax on the amount in excess of $1,000,000.00 at rates of 1% to 7%. Currently, Missouri does not impose an estate tax.

Category: Estate Planning · Media Appearances