There are so many things you need to consider when planning. When you have a family, one thing you need to do is create a comprehensive estate plan. Doing this may help ease stress and tension while they grieve your passing. When putting together a comprehensive estate plan, you have to think about how your actions will play out after your death. You want to keep things simple and ensure that your beneficiaries inherit in the most cost-effective and efficient way possible. This can be accomplished in a couple of ways. Find out more about this practice and ask an estate attorney, like from Klenk Law, if it is something you should consider.
What Is Estate Tax?
When you die, your estate will likely go through probate. When your heirs finally inherit the property or money you intended, they may have to pay estate taxes. Depending on how much the estate is worth will delineate how much taxes your heirs will need to pay. If you leave them something that is not liquid, such as cash, this may mean they have to come out of pocket for the taxes. This is not something that is always easily afforded. Creating an estate plan that minimizes estate taxes may hinge on using other fiduciary tools to lower the liability your heirs may face.
What Is Gifting?
To lower the tax liability assessed on your estate, you may want to consider giving money to charities or trusts either in the years before your death or immediately upon your death. The terms and conditions in your will and estate documents may call for a one-time donation, or your heirs may find that you have been donating steadily for years. Doing this, in either instance, will reduce the overall size of your estate, allowing your beneficiaries to pay less in estate taxes.
What About Trusts?
A trust account is a place where you can deposit money, property and any other asset during your lifetime. The items you place inside the account remain there unless you remove them (revocable trust), or they may stay there until your passing (irrevocable trust). Regardless, once you remove these assets from your total net worth, you reduce your tax liability. Using trust accounts to decrease taxes while you live can also minimize estate taxes when you die. These accounts also bypass probate putting money in your heirs’ pockets quicker.
If you are trying to reduce your estate tax liability, your estate planning lawyer is an excellent resource. Set a meeting now, so you know your family will not suffer further hardship after your death.