Accounting Articles > Estate Planning:
What is splitting the estate?
Splitting the estate basically means that each individual member of the marriage has a separate estate.
If you are married, then the estate tax credit, which changes every year and as of 2008 is $2,000,000, applies to both of you. In other words, when the first spouse passes, there is no estate tax because under the law you are one person. When the last spouse passes, the first $2,000,000 in value of the estate is non-taxable. Everything after that will be taxed at a rate close to 55%.
Since each member of the marriage has
a separate estate, the credit becomes $4,000,000 instead of
$2,000,000. This also means that the assets must be split. In other words,
some assets are titled in his name only, and others are titled only in hers.
Both have individual wills. This way, when one passes, the estate will be probated
and the assets will be distributed.
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