Understanding Living Trusts®
How You Can Avoid Probate, Save Taxes and More
17. How can a living trust save on estate taxes?
Your estate will have to pay federal estate taxes if its net value when you die is more than the "exempt" amount at that time. Currently in 2010 there is no federal estate tax, but it is scheduled to return in 2011 with a $1 million exemption and a 55% tax rate. If you are married, your living trust can include a provision that will let you and your spouse use both of your exemptions and leave up to $2 million estate tax-free to your loved ones, saving up to $435,000 in federal estate taxes. (Some states also have their own death or inheritance tax.)