Estate and Gift Taxes
Learn more about the various estate tax planning options that MVP Law Group can provide. Contact us today for a Free Consultation to learn more!
WILL MY KIDS HAVE TO PAY TAXES WHEN I DIE?
There's a big difference between inheritance tax and estate tax, and who pays!
What is an Inheritance Tax?
Inheritance tax is a state tax on the receipt of assets from someone who died. For federal tax purposes, inheritance generally isn’t considered income. But in a few states, inheritances can be taxable. The person who receives the assets will need to pay the tax.
What is an Estate Tax?
An estate tax is a tax on the right to transfer property when you die. The IRS exempts estates of less than $11.58 million in 2020. Plus, that exemption is per person, so a married couple could double it.
Inheritance tax vs. estate tax
Inheritance tax and estate tax are two different things. Estate taxes are paid out of the deceased’s estate. Inheritance taxes come out of the beneficiary’s pocket. One, both or neither could be a factor when someone dies, depending on the estate plan and the state.
PLANNING FOR ESTATE TAXES
Estate and Gift Tax Applicable Exclusion:
The amount that can be passed free of federal tax. Whatever amount is used during lifetime is no longer available for use to pass assets at death. The Estate and Gift Tax Applicable Exclusion is currently $11.58 million.
Annual Gift Tax Exclusion:
The amount that can be given to each person you want without using any Applicable Exclusion. The Annual Gift Tax Exclusion is currently $15,000.
Generation-Skipping Tax Exemption:
This allows for giving to people who are grandchildren or other “skip persons.” It may also be used as a sophisticated way of avoiding Federal estate tax at the death of a child. Each person currently has $11.58 million of Generation-Skipping Tax Exemption.
State Estate Tax:
In addition to the Federal Estate Tax, many states have a State Estate or Inheritance Tax. State Estate and Inheritance Tax may apply at a much lower level than the federal tax. It may apply when a person dies when resident in or owning property in any of the many states with such a tax.
How MVP Law Group can help!
Problems arise when people don’t coordinate all of the correct methods of passing on their estate. If you have a well-drafted estate plan in place, you will ensure that your estate passes to whom you want, when you want, and is carried out in the manner you’ve chosen. You can rest assured that your family won’t have to endure the public process and costly matter of probate. The government won’t be able to take what you’ve spent a lifetime building. But you need to be aware of the many options that exist in estate planning – and you must choose your estate planning attorney wisely.
We offer a wealth of free information and free estate planning seminars in our area. Explore the resources available on our website or join us for a free Estate Planning Seminar.
We want you to feel confident about the choices you make – let us be your guide on the path toward preserving your family’s future.