Estate Tax Planning
Protect your beneficiaries
Minimize estate taxes
And maximize the assets you pass on
Who has to pay the estate tax?
Estate tax is paid on the net value of all the assets you own at the time you pass away. It amounts to 40 percent of the value of your estate and must be paid by your family or other beneficiaries within nine months of you passing away.
Currently, estate tax largely affects high-net-worth individuals with an estate exceeding $13.6 million ($27.2 million for a married couple). Still, the regulations change from year to year and from administration to administration.
Just because you are not affected by estate tax now doesn’t mean you won’t be in ten years’ time.
It is beneficial to understand the steps needed to reduce your tax burden, even if you are not close to the current federal exemption limit. That can always change.
40 percent is clearly an enormous tax bill.
How to minimize estate tax
How do you reduce your family’s tax burden if you are an individual with an estate currently valued at $13.6 million or more?
One of the most widely known ways to minimize estate tax is by gifting assets. An independent estate attorney can advise on this. However, they advise other strategies. Depending on your circumstances, they can consider the following:
- Setting up asset protection trusts
- Creating life insurance trusts
- Forming family limited partnerships or limited liability companies (LLCs)
- Using qualified personal residence trusts
- Utilizing dynasty trusts
- Selling assets to an irrevocable trust created for you by a third party
Start conserving your assets
As well as minimizing estate tax in the future, there is another concern for many individuals: preserving your assets now.
It is ensured that both your asset preservation and estate tax planning concerns are accounted for. It is important to take measures to protect your assets before a larger percentage is lost through unnecessary tax payments or long-term care.
A few simple asset preservation planning measures can make a big difference.
An independent estate attorney will look at the following areas of your assets and advise on the steps you can take to protect them, based on your circumstances:
- The gross value of your estate
- Life insurance
- IRA and 401K accounts
- Jointly owned assets with a spouse
- The present situation with your will(s)
With you, they will consider the risks and how best to counter them, using strategies such as revocable trust setups. They also work with your financial advisor to explore asset preservation options such as wealth replacement strategies using life insurance and other vehicles.
Attending to this while you are alive and well could save your family from paying the price.
