What types of taxes must be considered when preparing an estate plan?
The basic kind of taxes one must take into consideration when preparing an estate plan are gift taxes and income taxes. Gift taxes are generally paid when a gift is made. Income taxes are paid annually. Income Taxes The U.S. taxes its residents and citizens on their worldwide income while Taiwan taxes any individual who has ROC source income. ROC source income is any income earned in Taiwan including but not limited to business income, salary and wages, income from professional practice, interest and rent and royalties. In the U.S., you generally get a step-up in basis on inherited assets. However, certain assets such as income in respect of decedent and treasury bonds do not get a step-up in basis and planning must be done to reduce the income and estate taxes on these assets. Gift Taxes Both the U.S. and Taiwan impose a tax when gifts are made. The U.S. allows you to give de minimis gifts of up to $10,000 adjusted for inflation each year to unlimited persons without filing a gift tax
