ISSUE #38

Retirement and Estate Tax Returns

Not knowing where you are or what you are facing usually leads to less than ideal results. Here’s hoping INFORMATION furnished in this newsletter EMPOWERS AND motivates you to have your best plan ready for implementation.

Life Retirement:   A new report from LIMRA on the decision to retire shows that many consumers are not doing enough planning and thinking about the financial aspects of retirement – things like calculating future income, expenses and debt, or how long their assets will carry them through a potentially long life after work.

RETIREMENT STATISTICS: 

Reports from LIMRA (Life Insurance Marketing and Research Association)'s Retirement Research group tells two somewhat conflicting stories about working in retirement and how people view the financial aspects of retirement planning:

• 50 percent of surveyed individuals have definite plans to work after retiring.
• A majority of those who have plans to work after retirement state they will do so voluntarily, i.e., because they want to rather than because they need the money.
• Mental stimulation and physical activity are the key reasons cited for continuing to work.
• But in spite of those rosy aspirations, LIMRA found that many individuals are not making specific quantifiable arrangements or the necessary calculations to assure a sound and comfortable retirement (e.g. estimating reasonable future income, expenses and debt, or how long their assets will carry them through a potentially long life after work.)

Estate Tax Returns Summary:   The total number of estate tax returns filed fell by 58 percent to about 45,000 in 2005 from about 108,000 in 2001. The total amount of assets represented by these returns also fell but by far less. Total gross estate (assets) on these returns fell by 14 percent to $185 billion in 2005 from $216 billion in 2001. Meanwhile, net estate taxes reported on these returns declined by even less, only 8 percent.

ESTATE TAX STATISTICS:

• Estate tax revenue stayed relatively stable during a large drop in the number of estate tax returns filed from 2001 to 2005.  Estate tax revenue dipped only from $23.5 billion in 2001 to $21.6 billion in 2005, and changed little as a percentage of total revenue.
• The number of estate tax returns plummeted 58 percent between 2001 and 2005, from 108,000 to just 45,000. (The decline is attributable to a series of incremental increases in the estate tax exemption and will likely continue.)
• Estates with less than $1.5 million in assets paid a relatively small share of all estate tax.
• The percentage of total estate taxes paid by the largest estates steadily climbed from 2001 to 2005.
• Revenue from Federal estate and gift taxes has (with a few exceptions) lingered between 1 percent and 2 percent of Federal budget receipts since World War II.
• Income from non-farm sole proprietors rose 9 percent from 2004 to 2005 to reach $270 billion.

AS ALWAYS, FEEL FREE TO CALL TO DISCUSS THESE OR OTHER ISSUES OF IMPORTANCE TO YOU!

This publication has been prepared as an educational resource to help the reader identify areas of potential concern. The publisher is not engaged in rendering legal, accounting or other professional services. The information contained in this publication should not be acted upon without first obtaining the advice of a professional advisor. Material may not be used without permission. Leimberg and LeClair, Inc.

You may wish to access NEW information this month at: www.ashland.edu/estate and “click” on “Planned Giving” in the left hand column.

Our planned giving director, Paul Ditlevson, can be of tremendous service in helping you integrate your giving goals with your overall estate plan. He can also help you prepare to visit your attorney. You can reach Mr. Ditlevson by calling 419-289-5090 or by email to pditlevs@ashland.edu or regular mail at 401 College Avenue, Ashland, OH 44805.