It was Benjamin Franklin who said that nothing is certain, save for death and taxes. While that’s largely true, it’s important to note that federal tax policies change on an annual basis, most notably the federal exemption level. This is an important thing to be aware of, both for general tax and estate planning purposes.
What this means is that when you die, if your net worth exceeds the above threshold (individually-unmarried or married), then there will be a tax, referred to as a Federal Estate Tax or Death Tax on the delta at a tax rate of 40 percent. You can visit the IRS’s website to get further information on the current estate tax schedule by clicking here. There are estate planning strategies we can implement within your overall structure to best minimize and sometimes eliminate this estate tax.
Advanced estate planning can involve the use of irrevocable trusts to mitigate your estate tax exposure while also controlling the assets you have gifted away to your kids or other loved ones. It is important to have this conversation early on with your estate planning attorney to optimize the timing and leveraging of certain assets prior to any appreciation event.
Advanced estate planning is very complex, and many estate planning attorneys are not comfortable handling such cases. In other instances, they simply do not have the experience in this area to realistically produce a solid and viable estate tax mitigation plan. The attorneys at Singh Law Firm are regularly called upon to use their experience and expertise in this area to help their clients develop the best possible tax mitigation strategies.