What is Estate Tax Planning?
Estate tax planning is a process that allows the owners of property and assets to determine how their assets will be redistributed after they die. Every country has estate taxes, which are deducted from the estate before it is paid out to the beneficiaries of the will. Estate tax planning allows individuals to arrange their finances in a way to minimize the taxes paid. Careful estate tax planning allows you to eliminate all probate costs, as well as reduce estate taxes. Probate is a legal process through which your will and estate are reviewed and decisions made on the best way to distribute your assets. In the United States, if you don’t have a will, then your estate automatically goes to probate. There are several ways to minimize estate taxes. The most common is to pass the property on to the beneficiaries while you are still living, and the other is to skip a generation and bequeath your estate to the grandchildren. These methods both present unique challenges that would need caref
Estate tax planning is planning on how to pay the transfer tax the government imposes on you to give your assets to someone other than your spouse, such as children, grandchildren, friends, etc. Estate tax rates and exclusions change every year, therefore planning for the future tax is like hitting a constantly moving target. So the best approach is to plan with a big picture mentality. Estate tax planning involves the planning of how to eliminate, reduce and/or pay the estate tax. The easiest way to calculate how much will be due is to take how much you are worth and divide by 2. This will normally give you a very high end estimate of the tax. Now once you know the amount of the tax you can take steps to reduce or eliminate the tax. One of the only ways to eliminate the tax is to give everything to charity. This is a fair and noble cause. You can reduce the tax by a number of sophisticated planning techniques. These include the proper use of trusts, family limited partnerships and man
Estate tax planning is a sophisticated and inter-related plan created during a person’s life, which uses asset re-titling, gifting, family business entities, and the creation of revocable and irrevocable trusts to transfer ownership and control of a person’s assets before and after death. One goal of the plan is to avoid the payment of unnecessary estate taxes. Another important objective is to retain as much of the income and control of assets as possible. Often, the two goals conflict. We work closely with each of our clients to achieve the desired balance between tax planning and control of assets during the clients lifetime. C. HOW DO I KNOW IF I NEED ESTATE TAX PLANNING? If the value of the assets owned by you or you and your spouse exceed the current estate tax “Unified Credit Exemption Equivalent” amount (see table below), you need estate tax planning because every dollar of assets over this amount, after deducting estate expenses, debts and charitable gifts, is going to be subj
