Free Estate Size Worksheet and Tax Calculator - Single

Include the value of any business property that you may own. Such property may include your share of a business (e.g., sole proprietorship, partnership, corporation, limited liability company, or other entity). It could include tools, equipment or other assets used in a business. Use your best judgment to determine its fair market value, the amount for which the property could be sold to a neutral third party. The accountant or tax return preparer for the business may be able to help you determine the value.

Include the current balances of your checking accounts, savings accounts, certificates of deposit, money market accounts, and other "cash" accounts. Use the balances from your most recent statements, or obtain more current balances through direct contact (e.g., phone or Internet access) with the institution that maintains the applicable account.

Enter the current unpaid balance on any credit card obligations. Use the balances from your most recent statements, or obtain more current balances through direct contact (e.g., phone or Internet access) with the credit card company.

The "Earnings Growth Rate" column can be used to project an annual earnings rate for cash accounts and investments. It can also be used to increase an asset category by an "inflation" factor or other projected growth rate. Similarly, it can be used to project an annual percentage growth of debt.

The value of your assets minus your liabilities is needed to determine whether "estate taxes" may be an important consideration in the preparation of your will (or living trust). Federal estate taxes are not usually a factor in estates of less than the federal applicable exclusion amount of $2,000,000. Although your combined assets may be less than $2,000,000 now, future growth in the value of your assets may cause the value of your estate to exceed the federal applicable exclusion amount.

The Estate Size Worksheet and Tax Calculator is divided into four sections. First, you provide some personal information. Next, you are asked for information regarding the values of your current assets and liabilities. In the third section, you can enter some assumptions about how your investments and other assets may increase in the future because of inflation, investment earnings, and additional savings. In the last section, you can see how much federal estate tax would be owed on the current value of your assets and also on the future value of your assets.

For an explanation of how the personal information is used, see the Personal Information topic.

Under current federal estate tax law, you can transfer $2,000,000 (the "federal applicable exclusion amount") to your estate beneficiaries with no liability for federal estate or gift taxes. The federal applicable exclusion amount is scheduled to increase to $3,500,000 by 2009. The federal applicable exclusion amount is usually used to protect transfers that are made from your estate at your death. However you can use up some or all of your federal applicable exclusion amount by making large gifts during your lifetime.

This federal applicable exclusion amount is really a unified credit. This credit is called a unified credit because the federal gift and estate taxing schemes are unified into one system, with one unified credit of $780,800 (the unified credit amount) available to offset the taxes that would otherwise be imposed on transfers totaling $2,000,000 (the federal applicable exclusion amount). For example, for a death occurring in 2008, an estate with taxable assets of $2,000,000 would be assessed with $780,800 in federal estate taxes. However, the unified credit of $780,800 would be subtracted from the tax due, and thus, there would be no liability.

The federal applicable exclusion and unified credit amounts are shown in the following table:

For People Who Die During:
2007 - Federal Exclusion Amount: $ 2,000,000 Unified Credit Amount: $780,800
2008 - Federal Exclusion Amount: $ 2,000,000 Unified Credit Amount: $780,800
2009 - Federal Exclusion Amount: $ 3,500,000 Unified Credit Amount: $1,455,800
2010 - No Estate Tax owed, unless current laws are repealed or modified.

Based on your current estate value and your expected future growth, your estate may be liable for federal estate taxes. The tax calculation starts with your assets minus your liabilities. You can then deduct amounts for "Funeral and Administrative Expenses" and "Bequests to Charity."

The "Gross Federal Estate Tax" is calculated on the "Federal Taxable Estate," using the federal estate tax rates. The "Unified Credit" (which protects the federal applicable exclusion amount from tax) is then deducted to determine the "Net Federal Estate Tax." For more information, see the Federal Applicable Exclusion Amount / Unified Credit topic.

Note: This federal estate tax calculation ignores the state death tax credit, because this credit (available on your federal estate tax return) is offset in most states by a state estate tax that is equal to the credit given on the federal return. Thus, the federal tax calculation is equal to the combined federal and state estate taxes that are applicable in most states.

Typically, estate planning focuses primarily on the value of your estate at the time that you are doing the estate planning, with only cursory attention given to increases (or decreases) that may occur in the future. Although predictions regarding the future are speculative in nature, subject to changes that you cannot accurately anticipate, it is worthwhile for you to spend some time reviewing how much your estate might grow in size, given certain assumptions.

The size of your estate can increase significantly, based on three factors: annual increases by you from earnings (or other sources), annual increases over a longer period of years, and an earnings growth rate that causes your investments and other assets to increase in value even if you do not add "new" savings.

Include the current values of your stocks, stock options, bonds, mutual funds, and other investments. For accounts with brokerage firms, use the balances from your most recent statements, or obtain more current balances through direct contact (e.g., phone or Internet access) with the brokerage firm that maintains the applicable account. For stocks, bonds, and other securities that you hold directly in your name, you may be able to obtain price quotes from your local newspaper or an Internet source. Tables can be obtained from banks and Internet sources to value U.S. savings bonds.

Your estate includes the value of life insurance policies that you own at your death. If the policy is on your life, the value to be included in the estate is the amount of the death proceeds. This amount is usually the face amount, but can be more or less than the face amount depending on the pay-out terms of the policy. If you own a policy on someone else's life (perhaps a child), the value to be included in the estate is the cash surrender value of the policy as of your date of death. Generally, do not include values for policies that you do not own, even if your life is the life insured by the policy.

The "Number of Years For Annual Increases" column is used in conjunction with the Annual Increases by You from Earnings column to project how many years the annual increase (or decrease) will be in effect. For example, you may want to project that you will add $10,000 per year to your "Investments" for 15 years by saving that amount from your annual earnings and adding it to your mutual fund investments.

Enter the values of any other assets that you may own that did not seem to fit well under any of the prior categories.

Enter the current unpaid balance on any other loans or debts that you may have. This category may include education loans or a loan received from a relative. Use the balances from your most recent statements, or obtain more current balances through direct contact (e.g., phone or Internet access) with the lender.

Include the fair market value of any other real estate that you own. Such real estate could include a time share condominium, a vacant lot, forest reserve acres, farmland, or rental property. If you own such real estate jointly with one or more other persons, include only the value of your share. Base your valuation amount on "fair market value," the amount for which the real estate could be sold to a neutral third party. The amount that you paid for the real estate may be relevant in helping you decide the price at which you could sell the real estate to a third party, but you should also take into consideration any other factors (including the mere passage of time) that might influence the value.

Valuations provided by local real estate taxing authorities may be somewhat helpful, but in many jurisdictions, the valuation for real estate tax purposes is not actually fair market value even though it may carry the label of "true value" or "full value."

The personal information section includes your name and marital status. Although federal estate tax rates are the same for singles and married individuals, there are other important differences. Property that passes at death to a surviving spouse is not subject to federal estate tax, and therefore, the tax calculation and analysis is different for a married couple.

Under current federal estate tax law, you can transfer a certain amount of assets (the "federal applicable exclusion amount") to your estate beneficiaries with no liability for federal estate or gift taxes. The program uses the "Effective Date for this Calculation" to determine the correct federal applicable exclusion amount to use in the federal estate tax calculation. For example, if you use any date in 2008 as the "Effective Date for this Calculation," the federal applicable exclusion amount of $2,000,000 will be used. For a more complete explanation, see the Federal Applicable Exclusion Amount / Unified Credit topic.

Include the value of vehicles, jewelry, household furnishings, and personal effects. For vehicles, the "blue book" value can be obtained by contacting a dealer, or you can obtain a reasonable estimate by checking the prices of comparable vehicles listed for sale in your local newspaper. For other personal property items, be sure to use the value that could be obtained if such items were sold. Sometimes the only reasonable value is your best guess as to what the items would bring at a garage sale, an amount that might be considerably less than the value of the items to you. A reasonable estimate is acceptable.

Include the value of your personal residence. If you own it jointly with one or more other persons, include only the value of your share. Base your valuation amount on "fair market value," the amount for which you could sell the residence to a neutral third party. The amount that you paid for the residence may be relevant in helping you decide the price at which you could sell the residence to a third party, but you should also take into consideration any other factors (including the mere passage of time) that might influence the value.

Valuations provided by your local real estate taxing authority may be somewhat helpful, but in many jurisdictions, the valuation for real estate tax purposes is not actually fair market value even though it may carry the label of "true value" or "full value."

If you own more than one personal residence (perhaps a vacation home), be sure to also include the value of that residence.

Enter the current unpaid balance on any mortgages, deeds of trust, or similar loan obligations that are liens on your home. This category includes home equity loans. Use the balances from your most recent statements, or obtain more current balances through direct contact (e.g., phone or Internet access) with the institution or other lender.

Include the current values of any IRA accounts, 401k plan, pension plan accounts, or other similar retirement assets that you may own. However, if for a specific account your right to payments or benefits terminates at your death, and if there are no benefits for your survivors, do not include any value for that particular account.

1. The Estate Size Worksheet and Tax Calculator is not a legal document and does not require any signature, witnesses, or notarization.

The estimated value of your assets, minus the estimated value of your liabilities is used in calculating the amount of federal estate taxes.

In general, each asset should be valued at "fair market value," the amount for which you could sell the asset to a neutral third party. The amount that you paid for an asset may be relevant in deciding fair market value, but cost is not the determining factor.

Keep in mind that you are entering estimated values. It is not necessary to spend a lot of time trying to eliminate minor differences between your best estimate and the actual fair market value.

Note: When entering values for property that you own jointly with another person, enter only the value of your share of the property.

This program offers three methods for your use in providing this information. Each method has its advantages.

No Detail: This method is the shortest and fastest. Simply enter one amount for your total assets and one amount for your total liabilities.

Brief Summary: This method allows you to enter estimated totals for typical asset and liability categories. The program then adds the assets and deducts the liabilities for you. This method can be completed quickly if you already have a good idea of the values of your assets and liabilities by categories.

Full Detail: This method allows you to enter detailed information for each asset and liability category. The advantage to this approach is that in addition to obtaining a tax calculation, you also have a listing of your assets and liabilities, as well as a record of how you calculated the estimated value of your estate.

You should include the categories of assets and liabilities that apply to you. The program then customizes this worksheet to include only questions about those particular categories. The next dialogs will allow you to describe and value specific assets (or liabilities) within the particular categories that you have selected.

In general, each asset should be valued at "fair market value," the amount for which you could sell the asset to a neutral third party. The amount that you paid for an asset may be relevant in deciding fair market value, but cost is not the determining factor.

Keep in mind that you are entering estimated values. It is not necessary to spend a lot of time trying to eliminate minor differences between your best estimate and the actual fair market value.

Note: When entering values for property that you own jointly with another person, enter only the value of your share of the property.