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Want to Save $83,400 in an Hour?

Friday, May 4th, 2012 | Uncategorized | No Comments

East TN Mountain ViewsBy Michael L. Smith, Esq.

Is it possible to save tens of thousands of dollars legally and tax free in the time it would take you to watch your favorite TV show? You bet it is. A retired couple I met with recently was able to do just that. Let me explain.

My retired clients were in their 60’s with three grown children and had worked hard for many years to build an estate worth $2 million (which includes all of their assets whether real estate, cash, investments, life insurance, retirement accounts, etc.). They were enjoying this stage of life and the lifestyle that they had worked so hard to achieve, as they should have been. They had also been diligent with building their savings and investment accounts so that they had plenty of money for their golden years. However, they had neglected an extremely important aspect of their life plan and wealth preservation plan. They had never created a last will and testament. Thankfully they had taken the advice of a friend and had decided to be proactive about their estate planning. It is a good thing that they did, because failing to plan could have cost their family $83,400.

In Tennessee, all estates over $1 million are subject to the Tennessee Inheritance Tax with graduated tax rates of 5.5% to 9.5%. Each person who dies in Tennessee has a $1 million exemption from this tax; therefore, a husband and wife each have a combined exemption of $2 million. However, without proper estate planning, a deceased spouse’s exemption essentially dies with them, leaving the surviving spouse with only their own $1 million exemption. If my clients would have failed to plan their estate, two things would have happened. First, the state of Tennessee would have decided what would happen to their property based upon pre-determined estate succession laws. Secondly, their children would have owed the Tennessee Department of Revenue $83,400 payable within nine months of their parent’s death.

My clients were able to utilize both of their estate tax exemptions by creating Last Will and Testaments that contained Discretionary Credit Shelter Trust language. Having a Credit Shelter Trust Will plan will allow my clients to fund a Credit Shelter Trust upon the first spouse’s death with the surviving spouse benefiting from the trust during their lifetime. Furthermore, upon the death of the second spouse, their children will be able to claim both of their parent’s $1 million exemptions and legally shield $2 million from taxes. This plan will ultimately save my client’s children a total of $83,400. In a little over an hour’s worth of their time, my clients were able to save what amounts to an average yearly salary for an upper middle class American family. But, with a little more procrastinating, my clients might have lost the ability to preserve this wealth for their loved ones.

So again, I will ask the question: “Want to save $83,400 in an hour?” If so, I would be glad to help you take the first step towards peace of mind for you and your family.

About the Author
Michael L. Smith provides customized legal solutions for the citizens of Farragut, Knoxville, Knox County, Maryville, Blount County, Loudon County, Anderson County, Sevier County, Monroe County, and the East Tennessee region. Mr. Smith holds a B.S. in Business Management from Carson-Newman College, an M.S. in Sport Management from The University of Tennessee, and a J.D. from Liberty University School of Law. During law school, Mr. Smith served as the Student Bar Association President of his class. Additionally, Mr. Smith served in the Bush White House as an intern in the Presidential Personnel Office. While at the White House, Mr. Smith assisted in recruiting executives to serve the President in the U.S. Department of Commerce, the U.S. Department of the Treasury, and the U.S. Department of Transportation. Mr. Smith’s practice areas include Estate Planning, Estate Administration, and Business Law. Mr. Smith is a member of the Tennessee Bar Association and the Christian Legal Society. Michael is married to his high school sweetheart, Kari, and they have four boys: Lukens (10), Kensley (9), Caleb (5), and Jake (3).

Michael L. Smith, Esq.
(865) 777-WILL (9455)

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