If you are leaving assets and money behind for your loved ones, you probably want to make sure that they will not end up facing a burdensome tax bill. This can happen to people though, and it is all thanks to the estate tax. Fortunately, there are some ways to plan around this tax and reduce the burden on your family. A Monmouth County estate planning attorney can help you develop a complete estate plan that takes this taxation into account. If there is a legally sound way to reduce the amount of tax that you need to worry about, we can help you find it.
How Does Estate Tax Work?
Essentially, the estate tax looks at inheritances and their value. If your loved one leaves you something with a high monetary value, you often have to pay tax on it. A solid estate plan can avoid as much estate tax as legally possible.
It is important to note that this is an exemption for estate tax, just as there is on income tax. You must reach a certain threshold before you get charged tax. If you are leaving behind more than $12.92 million in assets, your loved ones would probably appreciate it if you met with a lawyer and figured out some way to ensure that there are no surprises for your beneficiaries.
Can Giving Gifts Lower My Estate Tax Bill?
Some people can lower their estate tax burden by essentially starting off the inheritance process early. Giving gifts each year can reduce the size of your estate and help you avoid unnecessary taxation.
Spouses: You can just transfer money to your spouse and that will not be taxed. However, if you pass away and then your spouse passes away, these assets can be subject to an estate tax.
Children and grandchildren: You can gift your child or grandchild $16,000 per year without worrying about a gift tax. Your spouse can do the same.
Beneficiaries who are minors: The law allows you to set up accounts with money and securities for minors. You can even set aside assets like patents or artwork.
Should I Set Up a Trust?
There are some types of trusts that can help here, like AB trusts and QTIP trusts. Some trusts allow you to continue accessing these resources. Others prevent certain people, including your spouse, from taking out funds. We can help you establish a trust that works for you and your family.
Does Donating to a Charity Affect My Estate Tax Bill?
Yes, donating to a charity can help you here. Charitable donations often have tax benefits associated with them, and donations from your estate are no different. A lawyer can help you establish a trust or another way of giving away your assets. These charitable donations lower the total value of your estate, which can help if you reduce the estate tax bill, if there is one.
Start Your Estate Planning Today
We have decades of experience helping clients with their estate planning needs. If you have any questions about taxation, inheritances, or your own estate, contact the Law Offices of George J. Mardinly. We can help you write out all of the documents that are needed to protect your assets, your beneficiaries, and yourself.