Your entire estate may be subject to federal and state taxes. If you fail to plan for estate taxes, your estate may be subject to unnecessary taxes. The following information is VERY GENERAL - - merely a summary of existing laws, which tend to be changed frequently. If your estate is likely to be subject to these taxes, your attorney may recommend consultation with a Certified Public Accountant or other tax professional. This information is provided to give you an idea of how tax considerations may impact your estate planning.

Unified Estate and Gift Tax: This federal law potentially imposes a tax each time you give away any property to someone else, either while you are alive or upon your death. The tax rate is progressive. In 2004 and 2005, there is a "unified credit amount" or "exemption equivalent amount" of $1,500,000 (in 2004 and 2005), which is the value of property the tax on which is offset completely by the credit. Thus, $1,500,000 can pass, as lifetime gifts or upon death, without payments of any federal estate or gift tax. The current estate and gift tax ranges from 37% to 48% when amounts transferred during life or at death exceed the statutory amount. There is also a deduction allowed from a person's estate for property that passes to a surviving spouse. This is referred to as the marital deduction or unlimited marital deduction.

Gifts during your lifetime that do not exceed $11,000 per recipient per year (or $22,000 if your spouse agrees to "split" the gift) are excluded from the tax. This means you can give away $11,000 per year to as many people as you wish (or $22,000, if your spouse joins with you) without those gifts being taxed.

Unified Credit: Even if you give away more than $11,000 to someone in a given year, you might not actually pay a tax on that gift in that year. The law allows every individual to make taxable gifts in his lifetime or upon his death of up to $1,500,000 free of federal gift or estate taxes.

Marital Deduction: Any property you give to a spouse either by Will or during your lifetime (provided he or she is a United States citizen) is fully exempt from any federal estate and gift tax, even if that amount exceeds the exemption equivalent. It is therefore important to plan for both your and your spouse's deaths. While you can frequently defer all estate taxes on the first death by transferring all property to the surviving spouse, there will be a tax on the death of the survivor which could become even more burdensome on heirs.

Generation-Skipping Transfers: Any property given to (or held in trust for) anyone more than one generation below you (grandchildren and more remote descendants) will be subject to a "generation-skipping transfer" (GST) tax. This tax is imposed at the onerous level of 55%. Each person has a $1,000,500 exemption (more each year adjusted to inflation) from the GST. The tax is designed to make sure that transfers that "skip" a generation are taxed as though they had passed into the hands of that generation. Gifts that qualify for the annual gift tax exclusion are exempt from the GST tax. If you are planning to have grandchildren or more remote descendants inherit from your estate at any time, or even if there is a possibility (no matter how remote) that they will inherit, you must consider the GST tax consequences of your estate plan.

State Inheritance Taxes: State inheritance taxes have recently been phased out in Louisiana. Deaths after July 1, 2004 are not subject to the tax if the succession is opened within nine months after death. If the death occurred before that date, a surviving spouse is totally exempt from such taxes, as are any charitable, religious or educational organizations. Parents and children are exempt from paying any taxes on the first $25,000 inherited, brothers and sisters are exempt from the first $1,000, and non-related persons are exempt from the first $500.

In spite of the recent elimination of the Louisiana inheritance tax, if an estate is of a size to be subject to federal taxes, there will be an additional estate transfer tax due to the State of Louisiana.