Estate Planning Attorney
Depending on how much money your estate is worth, your family could be in for a rude awakening when your assets are taxed after your death. Right now, estates may be required to pay a tax of up to 40% of all their assets that exceed the $11.4 million limit. Note that assets include far more than the contents of your bank account; your total worth includes your investments, valuable possessions, and even your land. Consider a few tips that may help you minimize your tax burden so your loved ones receive the benefits you intend for them to have.
Forming a Trust
While many people pass down money and other assets in their will and testament, there are significant advantages to putting some or all of your worth into a trust. Though revocable trusts can help you eliminate the legal fees associated with the probate process, irrevocable trusts often offer the greatest tax advantages.
An irrevocable trust is simply an entity that controls your money up to and after your death. You, the grantor, can name a trustee to manage your assets. You can also pick one or more beneficiaries. Though you can take on these roles yourself, you would also appoint successors who will step up if the original trustee or beneficiary dies or falls ill.
Because an irrevocable trust is essentially set in stone once it has been created, it is generally not considered to be your personal property from this point on. This may help you avoid paying estate taxes on the contents of the trust.
Another way to decrease your tax burden is to make tax-deductible donations. These donations are typically sent to a charity or non-profit organization that supports a cause you value. This way, your funds are put to work making the world a better place while simultaneously reducing your estate taxes.
Similarly, you can give money away to friends and family before you die. You can gift each person as much as $15,000 each year without having to worry about tax consequences. This allows you to see your loved ones enjoy the funds and lowers your overall worth.
Though it isn’t always pleasant to think about the events that may follow your death, it’s important to make a careful plan for your estate so that your money is distributed according to your wishes. Contact an estate planning Attorney such as Johnston | Martineau PLLP today to begin discussing the future of your estate.