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    How a second marriage affects estate planning

    Decisions regarding wills, living trusts, and power of attorney critical when forming a blended family

     

    QTIP trust. A Qualified Terminable Interest Property (QTIP) trust is comparable to a marital trust. However, if the surviving spouse is entitled to a portion of your assets upon your death, he or she receives regular income payments but not the principal. When the surviving spouse dies, the remainder passes to the designated beneficiaries, potentially providing estate-tax benefits.

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    Estate taxes. The 2016 federal estate tax exemption is $5.45 million for individuals who die in 2016 (up from $5.43 million in 2015). A 40% tax rate applies to the value of an estate in excess of the $5.45 million exemption. The federal gift tax exemption is also set at $5.45 million for 2016 (up from $5.43 million in 2015). Gifts in excess of the $5.45 million exemption will be taxed at 40% as well.

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    These are just some of the estate planning considerations for a blended family. Other options may be available in your situation. Your estate-planning attorney can help optimize your estate plan under the current federal estate tax rules as well as point out any applicable state-specific tax rules when making these changes.

    Next: What is a passive mutual fund? 

    Joel M. Blau, CFP
    Mr. Blau is chief executive officer of MEDIQUS Asset Advisors, Inc., in Chicago. He can be reached at 800-883-8555 or [email protected]
    Ronald J. Paprocki, JD, CFP, CHBC
    Mr. Paprocki is chief executive officer of MEDIQUS Asset Advisors, Inc. in Chicago.

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