Are you concerned about providing for your family after you’re gone?
Estate tax planning can seem overwhelming and complicated, but it doesn’t have to be.
By keeping a few key things in mind, you can create a solid plan to help you minimize the taxes owed upon your death. This helps to ensure that your assets are transferred to your heirs as smoothly as possible.
Here are seven things you need to keep in mind about estate planning. Keep reading to learn more.
1. Know the Federal and State Estate Tax Laws
First, you need to know the federal and state estate tax laws. The federal government imposes an estate tax on estates with a value of over a specific amount.
However, some states also impose their own estate taxes, and the threshold for these taxes can be much lower.
That’s why it’s important to understand the laws in your state to determine whether your estate will be subject to these taxes. A good estate planning attorney can help you navigate these laws.
2. Understand the Impact of Lifetime Gifting
Lifetime gifting is a popular estate planning strategy that involves making gifts to your heirs during your lifetime. By doing this, you can reduce the size of your estate and the amount of taxes that will be owed upon your death.
However, there are limits to how much you can give away tax-free each year.
3. Consider an Irrevocable Trust
Another strategy to consider is setting up an irrevocable trust. This type of trust removes assets from your estate, reducing the size of your estate and the amount of taxes that will be owed upon your death.
Remember that once you transfer assets to an irrevocable trust, you cannot change your mind and take them back.
4. Don’t Overlook Family Limited Partnerships
A family-limited partnership is another strategy to consider. This type of partnership allows you to transfer assets to your heirs while retaining some control over them.
For example, you can transfer ownership of a business to your children but retain control over the day-to-day operations. This can be a good strategy for individuals who want to transfer assets to their heirs but still want to maintain some control over them.
5. Plan for Potential Changes in Tax Laws
Tax laws can change over time, so planning for potential changes is important. Work with your financial planner or estate planning attorney to ensure that your plan is flexible enough to accommodate any future changes in the tax laws.
They can also help you set up a living trust and take advantage of a generation-skipping transfer to minimize your estate tax burden.
6. Don’t Forget About Probate
Probation is a legal process. It deals with administering an estate after someone passes away. The probate process can be lengthy. It can also be expensive and tie up your assets for months or even years.
There are several strategies that can help you avoid probate, so be sure to discuss them with your estate planning attorney.
A Guide to Estate Tax Planning
You’ve worked hard for everything you own. That’s why letting an estate tax planning professional help you keep as much of what you’ve earned as possible is important.
Please contact us today to schedule a free consultation with one of our estate tax law specialists at Monastra & Grater, LLC in Pottstown, PA.