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Author: ResN Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75802  
Subject: Re: Talk me out of a Financial Advisor Date: 6/5/2013 9:58 AM
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So if you have a $10million estate, and you die, your wife inherits your half of it without estate taxes, but your $5 million exemption is not used. When she dies, your daughter then inherits that $10 million estate, but there is a $5 million exemption from your wife, and so your daughter owes taxes on the additional $5 million. If, however, you had left your half to a trust when you died, your #5 million exemption is used up. When your wife dies, her $5 million exemption is then used, and daughter has now inherited that $10 million without having to pay estate taxes because both exemptions were used.

I could easily be wrong, but I think the current federal estate tax exemption for one spouse carries forward to the surviving spouse, assuming everything is left to the surviving spouse. This means that the surviving spouse can leave a total of $10M to the daughter (or anyone else) free of federal estate taxes. Under the old law, a person needed a trust to accomplish this, but under current law, a trust is no longer needed...at least I think that's the way it is now.
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