Estate Tax has an exclusion of a certain amount, although the index of inflation will go up, the amount will change. With regard to the Life Insurance, that can go into the trust and become part of the tax. In those cases, we take the Life Insurance and put it into a special Life Insurance trust, which only holds the proceeds and the policy. So by moving the Life Insurance trust, the estate tax is lowered at virtually no cost. 

The estate tax can be a penalty for poor estate planning. In many cases, the fees can amount to over 1 million dollars which comes out of the beneficiary’s proceeds. So by proper planning, large amounts of money can be saved. What can also be done is an AB Trust.

We take the Living Trust and upon death the trust is split into 2 parts. The have 1 portion which is the Survivor’s half and we have the deceased’s portion. We take 600,000.00 from the deceased’s portion and put that into a special bypass trust just for the purpose of the beneficiary’s which normally are the children, typically we don’t make the distribution right away- we defer it. This is an advantage which helps you avoid the State Tax exclusion. Between spouses there is an unlimited marital exclusion so you can designate husband or wife or vice versa to access the funds. There are cases that we don’t need an AB Trust, if the combined estate is over 1 million then you can decide on an AB Trust- the exemption can be doubled and pay 0 to State tax- which again can be a penalty for poor planning.
In our economy, we have a booming real estate; stock market and etc, where people see their funds grow tremendously. Now estates are growing so large, State taxes can be as much as 55 %. Planning is crucial to avoid large amounts of taxes.