A free, rudimentary estate tax calculator for advisers

While the 2010 Tax Act for now locks in the current marginal tax rates for all income levels, advisers thinking about the future need tools at their disposal now to help sort out a client's future options, especially when it comes to the estate tax. There may be several out already but I just found out about a super simple standalone online calculator to help financial advisers better understand the December changes in the estate tax law. It has been rolled out by Impact Technologies Group Inc., which is probably best known for working with and producing software for the insurance industry and its financial advisers. The Tax Act, known in longhand as “The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010,” has several modifications in it. With the calculator advisers can see the hypothetical effect of changes for the next two years and in turn compares them to what would occur following a reversion in 2013. The only inputs are a client's “taxable estate” amount, the “year of death” (set by default at 2011) and a check box for leaving the “Assume married and Basic Exemption Amount used, or carried over at spouse's prior death.” Leaving the default at 2011 or entering 2012 and hitting calculate will return a column of data in the “2010 Tax Act permanent” which includes “Tentative Federal Estate Tax,” “Basic Unified Credit,” and “Net Federal Estate Tax.” Change the year to 2013 or thereafter and you get a side-by-side comparison (scary). Among those factors that the calculator takes into account are:

• The unified tax credit amount equivalent to $5,000,000
• That the unused tax credit from one spouse may be used by the surviving spouse (referred to as portability)
• Unification of the Estate, Gift and Generation Skipping Transfer Taxes
• That estate and gift tax rates are capped at 35%

If nothing else I envision advisers might use this as a quick check on calculations instead of having to create their own formulas on a spreadsheet. Advisers reading this please pass along anything your own financial planning software providers have introduced in terms of resources, updates or standalone calculators to address the estate tax changes. Here is a link directly to the Impact Estate Tax Calculator itself. For more information visit Impact Technologies Group or its PlanLab Store. Related stories: Congress provides certainty on taxes — at least for now