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Estate Tax: The Government’s Cut

After working hard your whole life to make sure you have enough money saved up to live out your golden years comfortably, you undoubtedly hope to still have something to leave to your loved ones after you pass.

As Americans, we are no strangers to taxes. Throughout our lives, we pay all sorts, including income taxes, property taxes, sales taxes, capital gains taxes, etc. What many people may not realize, however, is that these taxes do not end when we die. Any assets we leave behind are still subject to government taxes.

Sometimes called an inheritance tax or even a death tax, the official name for the taxing of assets after someone passes away is the estate tax.

The best thing you can do within your lifetime to protect the estate you plan on leaving to your loved ones is to work with an experienced estate tax planning attorney. With the right plans in place, we can help you reduce, and sometimes even avoid altogether, the tax burden on your heirs.

How the Estate Tax Works

The estate tax is an entirely separate tax and is not in any way connected with federal taxes for income, property, sales, or any other tax you may be familiar with. Instead, the estate tax is paid after you pass away and is calculated based on the total net value of the assets you on at the time of your death.

Many people are astonished to learn that the estate tax can amount to 40% of your net estate – which can mean your heirs are only left with a fraction of what you intended. This being said, in many cases there are large exemptions to the estate tax, so generally, only high net-worth individuals and families are impacted.

No matter what your particular financial situation looks like, you will want to make sure you understand the full implications of the estate tax so that you can leave as much of your legacy as possible to your loved ones – and not the government!

Who Is Responsible For The Estate Tax Anyway?

Recent tax cuts just about doubled the exemptions that are allowed for the estate tax. The outcome of this change is that even fewer families are impacted by this hefty tax.

The current estate tax exemption for individuals is now $11.2 million, and for married couples it is now $22.4 million. What this means for you, is that if your estate will be valued at less than $11.2 million at the time of your death, you do not need to be concerned about the estate tax at this time.

For those who are impacted, however, 40% is a huge cut. Luckily, there are numerous estate tax planning strategies available to help reduce the amount that the government will be due. Here at Stafford Law Firm, we have experience with each of these strategies and can advise you on the best solutions for your particular situation.

Estate Tax Planning Strategies

Individuals and families who have high-value estates to their name face more than just the estate tax. We can help not only with limiting this estate tax, but also with navigating the possible advantages of gift taxes and generation-skipping taxes – both of which help limit the possibility of taxes wiping your estate out each time it is passed down.

Some of the most common estate planning strategies we can assist you with include:

  • Gifting assets
  • LLCs
  • Family limited partnerships
  • Various trusts:
    • Life Insurance
    • Qualified personal residence
    • Asset protection
    • Land
    • Dynasty
    • Grantor retained annuity

Protect Your Estate Both Now And In The Future

Your family’s wealth and legacy has been built over years and years and has taken lots of hard work. Your plan to preserve this legacy should be handled with just as much dedication. Protecting your estate from the estate tax is just one factor you need to consider.

Reach out right away to start discussing the full extent of your estate plan, including estate tax planning. We are here to be your trusted advisor and will help make sure your legacy lives on long after you have passed.

Frequently Asked Questions

There are several different strategies for reducing or even eliminating the impact of the estate tax. Working with an experienced estate tax planning attorney will ensure that you have the best strategies in place for your particular situation. The most popular estate tax planning strategies include gifting, life insurance trusts, qualified personal residence trusts, and family limited partnerships.

Your estate tax is calculated based on the net value of your estate at the time of your death. This means that the value of all of your assets is taken into consideration, and then the total of your debts and obligations is subtracted. This net value is then what is used for estate tax purposes.

Any estate that is passed to a beneficiary is subject to an inheritance tax (usually referred to as the estate tax). The federal estate tax does have exemptions though, so if the net value of your estate does not exceed $11.2 million, then your beneficiaries will not be subject to the estate tax at this time.

We Help You Protect Your Tomorrow Today

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Stafford Law Firm has helped me with several items over the years. Prompt and efficient. Can handle a wide variety of matters, both commercial and personal.

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Client

I couldn't more highly recommend Will Stafford, after working with him on my estate planning. Will took the time to genuinely understand my personal goals and values, and helped design a plan that was a perfect fit for me, rather than just using a cut-and-paste template.

Benjamin S.
Client

Will Stafford is an incredibly bright and knowledgeable attorney who I have worked with for many years. He has an encyclopedic knowledge of the estate and wealth planning strategies relevant to professionals with families.

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