One night at a party, Mr. and Mrs. Abercrombie are startled to hear an acquaintance describing how his uncle's estate was ruined by taxes. The gist of the tale is that the uncle's real estate holdings had to be sold, quickly and at a loss, in order to pay the estate tax. On the way home from the party, Mr. and Mrs. Abercrombie recall his disturbing tale and agree to ask their accountant whether such a thing might occur in their family.

The next day, Mrs. Abercrombie calls the accountant, who tells them that the Federal estate tax applies only to those with holdings in excess of $600,000.

Together, on the phone, the accountant and Mrs. Abercrombie compile the financial statement set forth above, indicating a net worth well below $600,000. Mrs. Abercrombie is relieved.

The accountant next asks, "What about life insurance and retirement benefits?" He indicates these items are to be included in the computation. With these items, Mr. and Mrs. Abercrombie's "estate" is twice the exempt amount. The accountant suggests a meeting among himself, the Abercrombies, and their lawyer, who is well versed in estate planning matters.

The meeting is held a week later. The discussion reveals that the Abercrombies' estate has grown considerably since their Wills were last revised. Their present Wills leave all to the surviving spouse, with the balance to children upon the death of both spouses. This was satisfactory when their estate was smaller, but inadequate to address their present estate tax concerns.

The lawyer explains that the $600,000 exemption is available to each spouse, for a total amount of $1,200,000. However, under their present Wills, the Abercrombies would be wasting one whole exemption, unnecessarily costing their children about $200,000 in taxes. He explains that the Wills can be revised to continue to provide for the surviving spouse (by use of a trust), while making use of both exemptions.

The Wills are revised and the Abercrombies are rightfully pleased with themselves for following up on their concern and saving their family a great amount of estate tax.

We have helped many people to accomplish the same improvement. Naturally, you should not act upon the information in this letter without the help of a qualified advisor. If you would like to review your estate tax situation with us, please call the attorney with whom you work, or Larry Ghilarducci, Alan Macpherson, Al Falk, or Eileen Peterson of our Tacoma office.