Death and taxes. As many great people have said, those are two great certainties that everyone will run into.
And if you are blessed enough to have worked hard to earn a sizable estate, both of those certainties can be very real.
But if you have a sound estate plan in place, at least one of those certainties can be turned into an uncertainty. And no, we’re not talking about immortality.
Death and Estate Taxes
Estate taxes are a real possibility for high net worth individuals and families, and the hit to the estate can be massive – the federal tax rate is 45 percent above an exemption level, and those states that have estate taxes will take their share above that, which could mean 60 percent of the estate could end up with the government instead of heirs.
How To Avoid Estate Taxes
No one would actually want to let the government be the primary beneficiary of a lifetime of hard work.
That is why estate planning is so important. With no estate plan, there are many tax saving opportunities that would be lost, which means the government becomes the biggest beneficiary of your death. Sounds ghoulish, right?
The estate tax is part of a whole different discussion as to whether it is actually double taxation on what you’ve already earned over your lifetime, but the reality is that the estate tax is there to essentially punish people for either having too much money or not having enough care or enough of a detail-oriented streak to put together a plan to shield assets from government interference.
As you might imagine, most people who are smart enough to make the money they make, are usually smart enough to make sure to secure their assets by following every single detail, right down through insurance policies, retirement and investment accounts, real estate and all other possessions with genuine value.
Plan For Life’s Certainties Today
As death is one of those certainties in our experience, it makes sense to plan for such a certainty and understand what is in front of us and how we can plan around it so our families are protected from the difficulty of probate court, and the hassle of dealing with the Internal Revenue Service over paying taxes on that which they inherit from us.
If you decide to forego the full-blown estate plan, at the very least it is beneficial to look into planning to mitigate or avoid estate taxes by using several tools that are available to shield your assets from the government. We have estate tax planning professionals available to inform you of your options based on your particular situation, so you can have a tax-protected legacy that can be passed on to future generations with little to no tax burden.
Some of the estate tax planning tools available include:
- Family limited partnerships, with which you can keep assets and pass them off to heirs using the gift tax exemption
- Personal residence trusts, where you can put your home inside and keep it away from the overall value of the estate, greatly limiting if not erasing your tax exposure, as your home is usually your largest asset
- Irrevocable life insurance trusts, where your life insurance policy is kept separate from your estate and is able to pay out full proceeds to beneficiaries without estate tax implications
- Charitable giving, where up to $12,000 per year per person can be given to family members or friends and it would all be exempt from future estate taxation.
These tools above are just general thumbnails; each tool has several variations that could be implemented according to the complexity and size of your estate, as well as your particular family situation (if you have multiple marriages, children you want to keep away from your estate, or family members who are infirmed and need your financial support to survive, etc.).
Keep The Government Away From Your Estate!
No matter how large your estate or how complex it needs to be to mitigate tax burdens, our estate planning professionals are on hand for free consultations and to advise you on your current situation and navigate you through the process to establish a solid, tax-friendly estate plan that can bypass a probate court and secure a long lasting legacy for future generations.