With the 2010 estate tax phasing out by the year's end, estate planning will now have to incorporate considerable measures to reduce tax implications for deaths that occur in the future. For the majority of individuals, the lax rules do not affect them.
However, in 2011, the exemption for the value of assets you own upon death will drop to $1 million. While there may be a possibility that the tax will be increased through legislation by Congress, it is best to plan for the worst.
When you pass away, the IRS may impose an "estate tax" on your assets, depending on how much they are worth. In California, only the IRS requires the payment of this tax, California has no "death tax". Your assets can be calculated by adding up the total of your life insurance, realty and bank account funds. In 2011, if this total reaches over $1 million, then the excess value will be taxed by the IRS at 55%. For example, if a loved one dies in 2011 and owns assets worth $1.5 million, then their estate will have to pay over $250,000 in taxes within 9 months of their death.
One of the focuses of estate planning is to reduce the amount of ownership interest that an individual has over their property. The government takes into account all property that the decedent owned, controlled, possessed or enjoyed. If you are a married couple, you could have a cumulative exemption of $2 million and through a Will or Trust, shelter all of that amount from the estate tax. Estate planning can also reduce taxes for assets valued over $2 million for a couple and $1 million for a single person through other means like gifting, charitable giving and family limited partnerships. The tools of estate planning employed by a competent attorney could effectively eliminate estate tax burdens on a family after a loved one's death.
For example, every individual is able to gift $13,000 per person, per year without any gift tax consequences. All charitable donations are tax exempt, so if your Will or Trust provided for a charitable gift at your death, the value of that gift would reduce your asset exposure to the estate tax. Many families consider this a better alternative than paying that tax consequence to the IRS. Finally, if a limited partnership is set up around the management of properties and securities, then a family can reduce the IRS value at death due to a discount given on assets that have multiple owners.
Effective planning helps to lower the overall costs that a decedent's holdings have to bear. Tax exemptions and credits are typically utilized in order to maximize asset distribution. In addition, varying trust structures are created in order to shelter property from an excess amount of liability.
A qualified and experienced attorney can assist you in creating a customized solution to your specific issues. Many intricate strategies can be incorporated into a plan that reduces a decedent's total holdings, which then leads to a smaller liability. Having the right legal professional on your side can save your beneficiaries thousands of dollars in estate tax and can keep more of your assets within your family.
Estate Planning Attorney Advanced Health Care Directive Or Durable Power of Attorney Can I Contest a Will? Preparing For Possible Incapacitation How Inheritance Claims Can Prove Very Difficult Working With Estate and Wills Lawyers - What You Need To Know
0 comments:
Post a Comment