Unified Tax Credit

The Unified Tax Credit is a misunderstood number and few Financial Planning Software packages poorly illustrate its true value, and even fewer retirement planning software tools even do an estate tax calculation at all, ExecPlan Express financial planning software does both. The UTC is often mistaken as an amount of your total estate’s value that is excluded from your estate tax. Actually it’s not. Most software takes your gross estate and subtracts an amount and then calculates the tax. Actually the correct method is to calculate the estate tax on the entire estate then subtract from the calculated estate tax the UTC. For 2010 there is no estate tax, however in 2011 the tax returns with a UTC of $345,000 or the equivalent of a $1,000,000 exclusion.