Protect Your Heirs From High Taxes Through Estate Planning
Are you leaving enough for your family? Even if you have plenty of assets, there might not be much left over after estate taxes if you don’t plan the right way. But through careful estate tax planning, you can preserve as much wealth as possible for your loved ones.
What Is The Estate Tax?
An estate tax, also known as “inheritance tax” and “death tax” is a tax when you pass away if your net worth is over a certain amount. The amount you can pass to your heirs constantly changes from year to year. That amount has been as low as $30,000 in the 1970s to an unlimited amount in the year 2011. Currently, the amount you are allowed to pass to heirs is a little over $11 million. The tax rate has averaged between 35% to 55%, with the more you’re worth the higher the tax rate.
The current exemption amount of $11 million is an irrelevant number unless you know you are going to die this year. The only exemption amount that matters is the exemption amount the year that you die. If you believe the IRS is going to want more of your money in the future rather than less money, you have to plan on the exemption amount going down.
The state of Arkansas does not currently have an Arkansas Estate Tax.
Do I Need An Estate Planner?
Yes- If you want to control what happens to your property after you pass, you must plan accordingly.
How Can I Save On Estate Taxes?
Through careful estate planning, you can shield as much of your money as possible from taxation. The most effective strategies include:
- Leveraging Living Trusts– If you are married, you and your spouse can put your assets in a living trust that has a credit shelter trust inside. This lets you receive double the normal estate tax exemption, so you can leave significantly more money tax-free.
- Using Other Trusts– Besides living trusts, you can also shield your money from estate taxes through an irrevocable life insurance trust.
- Giving Gifts– You can give up to $15,000 a year individually, or $30,000 with your spouse, to family members without paying the gift tax. This lowers the amount of assets left in your estate, reducing the likelihood that you’ll have enough for the estate tax to apply.
To learn more about avoiding estate taxes and maximizing your loved ones’ inheritance, contact Estate Planners of Arkansas P.A. today.