It is an unending goal of most people to minimize taxes as much as they possibly can, and to preserve wealth for themselves and their loved ones. Certainly, that goal becomes clearer when it comes to estate planning.
There are some good reasons for this. Federal estate taxes can be much higher than personal income taxes, with rates as high as 35 percent. When you combine that with the inheritance taxes levied by many states, estate tax rates can reach 46 percent or
Uncle Sam created uniform tax rates for both gift and estate transfers of assets. But, since the year 2002, Congress has set different tax credits for gifts and estate taxes.
For example, the estate tax credit allows every American to pass a specific amount of assets tax-free to their heirs. And, unlike the $1 million gift tax credit that must be used during an individual’s lifetime, the estate tax credit is allowed to be used after death when distributing the assets in their estate.
Ever since 1997, with the passage of the Taxpayer Relief Act, the estate tax credit gradually increased over the next several years. However, for the year 2010, there was a full repeal of the estate and gift tax. And no one knew what would happen after that.
But, with the signing of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 by President Obama, federal estate taxes were restored – but not to their original 2002 levels. Instead, for the tax years of 2011 and 2012, there is a special $5 million estate tax exemption.
Estate taxes are due to the IRS within nine months from the decedent’s date of death. Because of this, surviving loved ones are often forced to sell assets and other belongings in order to pay this tax bill. Unfortunately, in many cases the assets that are sold are let go for far below market value in order to pay the bill within that nine month time-frame.
There are planning strategies that will not only save and protect assets, but can also allow much more control over where those assets go and how they are utilized. While estate taxes can never completely be eliminated, they can effectively be reduced with the use of different types of trusts.
If you’re ready to start getting your estate in order and secure your assets for the “worst-case” scenario, please give our office a call at 800-310-3100. Your first consultation is absolutely free. We’ll let you know what steps you need to take, right now, to protect yourself and your family. Call now.
Rick L. Law, Attorney, Estate Planner for Retirees.
Rick was named the #1 Illinois elder law estate planning attorney by Leading Lawyer Magazine. He has been quoted in the Wall Street Journal, AARP Magazine, TheStreet.com, and numerous newspapers and articles. Rick is the lead attorney for Law ElderLaw, LLP, focusing in Estate Planning, Guardianship, and Nursing Home Solutions. His goal is to give retirees an informed edge when it comes to dealing with an uncertain future. Get flexible retirement strategies that work during good times and bad, plus information on how you can save your home and assets from being used to pay for long term care. Appointments available in Chicago, Aurora, Oak Brook, Schaumburg, and Joliet. Call 800-310-3100 for your free consultation now!