Your estate will be subject to federal estate tax if your assets are greater than the minimum allowable at the year of your death. Estate taxes can eat away at the amount that you leave your beneficiaries—as much as one-third to one-half of the estate! A College Station estate planning attorney can help you avoid such a situation.
What Is Estate Tax, and How Much Is It?
The Internal Revenue Service collects an estate tax if the sum of the property held by the estate is greater than a set amount. For 2014 this amount is $5,340,000. For most people their assets are far below this minimum, so they don’t really need to worry. However, certain assets that may not be taken into consideration can push the value of the estate higher than you might think, such as a life insurance policy. Property that is included as a part of your estate is as follows:
- Real estate
- Life insurance
- Ownership of a business
You are allowed certain deductions and exemptions, including possibly capital losses, on the estate assets. For instance, you may donate a portion of the estate to a charity. Also, estate administration costs are deductible. If any unused exemptions remain in your estate after your death, this amount can be passed to your spouse to reduce his or her total taxable assets.
Why Do I Need to Pay Estate Taxes?
Many people wonder why the federal government should collect estate taxes at all. After all, the decedent already paid taxes on the assets at one time or another (such as at purchase of a home). The Internal Revenue Service collects tax any time money is transferred from one individual to another. It may seem unfair that the estate that you worked so hard to amass for your heirs should be gutted by taxes.
A College Station estate planning attorney can help you with ways to minimize—or even prevent—your estate from being taxed at all. For instance, you can transfer assets into certain types of trust while still alive. By doing this the assets held in trust in essence are no longer yours, but belong to the trust itself.
Call Us if You Would Like Help with Estate Tax Planning
If you are concerned about estate taxes or have any questions regarding how to set up a trust, call a College Station estate planning attorney at Peterson Law Group today. Call 979-703-7014 to arrange a consultation today.