Hamilton Estate Tax Planning Lawyer

Hamilton Estate Tax Planning Lawyer

Having an estate plan is quite crucial. You have worked hard to accumulate your property, so it is only right that you do your best to ensure that your assets go to the people or organizations you care about. To ensure that those you care about receive what you want them to receive, you should not forget about estate taxes. Estate tax planning is a crucial part of estate planning. If you are not diligent about estate tax planning, estate taxes may end up reducing the size of your estate and interfering with your goals. Lack of proper planning can lead to much of your legacy being lost in estate taxes. If you forget or ignore estate tax planning, those you care about may end up receiving less than you want them to receive. With proper estate tax planning, you can minimize tax and maximize the legacy you leave behind.

Indeed, estate planning, estate tax planning included, can be a complex process. Fortunately, you can make things less complex if you work with experienced professionals. An experienced estate tax planning lawyer can help you with estate tax planning.

Federal Transfer Taxes That Can Affect Your Estate

Three federal tax-transfer taxes can affect your estate. They are;

• Estate tax
• Gift tax
• Generation-skipping transfer tax

Estate Tax

Generally, the federal estate tax is imposed on all the property in which you have an interest at the time of your passing. This can include your house, business, life insurance, among others. However, every person is allowed to transfer a certain amount of money free of the federal estate tax. The amount you are allowed to transfer free of the federal estate tax is known as the “exemption amount.” Currently, the federal estate tax exemption is $12.06 million per U.S. decedent. However, married couples can double this amount. Additionally, you are allowed to pass an unlimited amount of assets to your spouse free of tax under the “unlimited marital deduction.” However, if any unused assets are still in a spouse’s estate upon their death, those unused assets will be subject to tax.

Upon your death, transferring your taxable estate could result in tax if the value of your taxable assets exceeds the federal exemption limit. According to current law, the federal estate tax rate is 40% on assets above the estate tax exclusion amount. So, for instance, if you have $2 million over the estate tax exclusion amount, you would pay $800,000 to the IRS and leave $1.2 million to give away. This is without including any state tax liability. However, if they are a U.S. citizen, any assets your spouse inherits are not subject to the estate tax because of the unlimited marital deduction.

It is crucial to note that any portion of the unused exemption amount is considered portable. This means that any portion of the exemption amount that goes unused can be transferred to a surviving spouse. However, this is only possible if your executor makes an election on your federal estate tax return after your passing. For instance, if a husband dies, leaving behind a wife, and he had used only $3million of his $12,06 million exemption amount, his wife will have a total exemption amount of $21.12 million, as long as the executor elects portability on the husband’s estate tax return.

Gift Tax

The gift tax comes into play when you give gifts to people throughout your life that total more than the exemption amount. However, gifts you give your spouse do not count against your exemption amount, as long as your spouse is a U.S. citizen. Currently, when it comes to gifts, the annual exclusion amount stands at $16,000 per person. For couples, it is $32,000. Fortunately, there are no restrictions on who you can give gifts to.

Generation-skipping Transfer (GST) Tax

If you transfer assets to someone two or more generations from you, GST tax may kick in. For example, if, as a grandparent, you gift your grandchild, GST tax may kick in. Also, GST tax may kick in if you transfer assets to someone who is not your relative but is 37 ½ years younger than you. However, the GST tax also has exemptions similar to the gift tax.

State Taxes

In addition to federal taxes, states can also levy estate and gift taxes. Some states have an inheritance tax. This tax is imposed on those who receive assets from a decedent’s estate. The beneficiary pays the inheritance tax, and the tax is levied on the value of the inheritance received.

How Can You Minimize Your Estate Tax Burden?

One way of minimizing transfer taxes is through a trust. Trusts are often used as part of a plan to reduce or eliminate transfer taxes. Establishing a trust provides you with an opportunity to create a legal arrangement through which assets will be held for your loved ones. With a trust, you can ensure not only that you reduce or eliminate transfer taxes but that assets are managed the way you want them managed and distributed the way you want them distributed.

Giving is another popular way of minimizing the estate tax burden. Giving can enable you to remove assets from your taxable estate every year. Each year, you can give people gifts within the annual gift tax exclusion amount. You can also choose to pay school fees or medical bills to minimize the estate tax burden. However, you must pay the school or medical provider directly.

There are many other ways of minimizing or eliminating the estate tax. It would be best to speak to a qualified estate tax planning lawyer for guidance. Speaking to an experienced lawyer can ensure you do not miss out on the opportunity to at least reduce estate tax.

Estate planning can be quite complicated, especially if you try handling it alone. It can get especially complex when taxes are involved. Estate tax planning is a complicated part of estate planning. Fortunately, an experienced estate tax planning lawyer with knowledge of tax laws can help you create a comprehensive plan that can help you ensure you pass on as much of your assets as possible to your loved ones. Call a Hamilton estate tax planning lawyer at (856) 672-7248 for help with estate tax planning.