Question

Harriet and Josh are husband and wife and have several adult children. Harriet has a net worth in excess of eight million dollars, while Josh’s assets are negligible. Suggest several planning procedures that will maximize the use of estate exemption equivalents (i.e., bypass amounts) in transferring Harriet’s wealth to the children under the following assumptions. Remember that the 2015 exemption for estate taxes is $5,250,000.

Answer 1

First of all we have to understand the difference between Tax planning & Tax evasion.

Tax Planning is done to reduce the Tax Liability on Assessee by following the Tax Laws.

Tax Evasion is a improper method to evade the Tax Liability from the Government.

If a Assessee done any planning to reduce his tax liability by transferring his property then the concept of Clubbing of Income comes into Picture. Under this Method , the income arises from the transferred assets will be clubbed in the income of Transferors.