Kelley Rating (one asterisk = lowest, five asterisks = highest):
- Ease of navigation, design of interface and learning curve ***
- Instructional documentation and help system ****
- Carries out the goal of the product as advertised ****
- Overall usefulness ****
DecoupleCruncher, version 2014.01, authored by Vincent F. Lackner, Jr. and Stephan R. Leimberg is a standalone state estate-tax calculator. It addresses individual state estate-tax calculations, allocation of state estate taxes among multiple decoupled (or quasi- decoupled) states and the advantages of lifetime gifts. It provides the methodology for state death tax calculations and planning.
After the increase of the federal Applicable Exclusion by ATRA 2012 (to $5.34 million in 2014) the state estate taxes for many estates that don’t reach the federal estate tax level effectively increased from the net marginal rate after the federal estate tax deduction to the full marginal state rate—making the state estate tax an even more critical element of estate planning.
DecoupleCruncher addresses single-state and multiple-state estate tax calculations for decoupled states. It includes a detailed display of the background calculations, computes the circular calculation for states requiring deduction of the state estate tax from their state estate tax base and displays the state tax advantage from making a lifetime gift. The program also calculates the optimized marital deduction based either on the basic circular state estate tax calculation when the state tax is charged to the marital deduction or the additional circular calculation when the will charges both federal estate tax and state tax to the marital deduction.
It allocates state estate taxes for up to four multiple states and computes a client’s Tentative Taxable Estate, State and Federal exclusions, Federal and State Tax, and Percentage of Gross Estate Lost to Tax for up to four states for the years 2005 through 2014. States supported include: CT, DC, DE, HI, IL, KS, MA, MD, ME, MN, NC, NE, NJ, NY, OR, RI, TN, VA, VT, WA and WI.
DecoupleCruncher provides the circular calculation for Illinois. Its multi-state calculations include the Maximum Credit for State Death Taxes, Net U.S. Estate Tax, tentative State Tax, pro-rata share of the tentative State Tax allocable to the other states and tax payable to the domiciliary state. It also illustrates the impact of the state death tax deduction in computing the federal estate tax, the optimal marital deduction and the potential benefit of making lifetime gifts.
The program does the state estate tax computations for all decoupled states, including both those tied into the pre-2002 federal tables and those having standalone tables. It doesn’t, however, address the computation of state estate taxes for Ohio or the exact inheritance taxes for inheritance tax jurisdictions.
How Does It Work?
The program opens with a simple screen on which you enter the name of the client and select the date of death and the state of domicile. It presents a matrix of lines and prompts for entry of the Gross estate (after the schedule JKLO deductions) and Total Deductions and Property in State for each state identified. In addition to a column for the state of domicile, columns are available for selection of up to three other states. Selection of states is made from a drop down list available at each column of the matrix. At the line Property in the State, you then enter value of property having a tax situs in each of the states you’ve selected.
The program then computes the Tentative Taxable Estate, Applicable Exclusion and percent of Gross Estate for each state you selected. A column labeled “706” is located on the right side of the matrix on which the federal amounts for the Gross estate, Total Deductions, Tentative Taxable Estate and Applicable exclusion appear. This column also displays the total state tax, the combined taxes and the percentage of the estate lost to estate taxes.
The opening screen permits you to display a calculation for single-state tax, computing the state tax as if all property is in the domiciliary state, and a calculation for multi-state taxes that breaks the state tax down among all the states you have selected. A button titled “Reallocate Assets” allows you to reallocate the property in individual states.
The opening screen assumes a full marital deduction for federal tax purposes. You may click on the button labeled “Planning” to view a screen that contrasts the results of paying the state tax in the first estate with doing so in the second estate. From this screen, the button titled “Pay Tax from Marital” compares the results in the first state of spouses when the state tax is paid from the credit shelter with when it’s paid from the marital legacy.
The program also allows you to compute the optimized marital deduction by either: (1) the “Real” federal tax method, with the federal tax remaining fixed and the state tax optimized, while calculating the marital deduction to be reduced by the federal tax, or (2) the Hypothetical tax method (applied in New Jersey, for example) that allows the federal tax to increase as the state tax changes and reduces the marital deduction by both taxes.
The program includes a display of the federal tables for exclusions and credits, the federal Table A unified rate schedule for all years, the federal Table B computation of the maximum credit for state death taxes and state tables for CT, HI, KN, ME, NE, OR, TN and WA. Editing tools for the data entry prompts are also included.
How Are Reports Furnished?
From the Print Setup button you may set up your printer to print a hard copy of the screen you are viewing or to print a PDF file of the screen.
Help and Support
Tech support is available by phone at 412-279-2121. Support is also furnished by email directly from the DecoupleCruncher program. Context sensitive help is available throughout the program.
DecoupleCruncher is priced as follows:
1st $495 $200
Each additional $295 $120 each
* Includes 1st year maintenance
DecoupleCruncher may be purchased from:
Lackner Group, inc.
Carnegie Office Park, Suite 290
800 North Bell Avenue
Pittsburgh PA 15106-4300
DecoupleCruncher provides a powerful tool for computing the state estate tax for single- and mult-istate situations and examining the consequences of various methods of computing and funding the state estate tax. It’s useful for state estate tax calculations, both in the preparation of federal and state estate tax returns and for estate tax planning.
Trusts & Estates magazine is pleased to present the monthly Technology Review by Donald H. Kelley—a respected connoisseur of the software and Internet resources wealth management advisors use to further their practices.
Kelley is a lawyer living in Highlands Ranch, Colo. and is of counsel to the law firm of Kelley, Scritsmier & Byrne, P.C. of North Platte, Neb. He is the co-author of the Intuitive Estate Planner Software, (Thomson – West 2004). He has served on the governing boards of the American Bar Association Real Property Probate and Trust Section and the American College of Tax Counsel. He is a past regent and past chair of the Committee on Technology in the Practice of the American College of Trust and Estate Counsel.
Trusts & Estates has asked Kelley to provide his unvarnished opinions on the tech resources available in the practice today. His columns are edited for readability only. Send feedback and suggestions for articles directly to him at [email protected].