Tax Tips are not a substitute for legal, accounting, tax, investment or other professional advice. Always consult with your trusted accounting advisor before acting upon any Tax Tip.
As a result of recent tax changes, every individual can now pass a minimum of $5 million to heirs after death without incurring an estate tax. The IRS adjusts this amount for inflation, and the limit for deaths occurring in 2013 is $5.25 million. If your estate is larger than $5.25 million, your estate may owe up to 40 percent of its value in taxes, so keep this figure in mind as you plan for the future. For example, using irrevocable trusts, you can remove some of your property from the taxable estate in order to reduce or eliminate your estate taxes. Probate
In most states, estates with values above a certain limit must pass through a lengthy and expensive legal procedure known as probate. When assets are part of a probated estate, they won’t pass to your heirs until the process is complete. Since the probate procedure is still going strong in 2013, it’s important to plan your estate accordingly. By leaving clear instructions in your will, for example, you can expedite the probate procedure. You can also remove some assets from your probated estate by transferring them into a revocable or irrevocable trust.
IRS and probate regulations are always changing, so it’s important to stay up-to-date and modify your estate plan accordingly. Consider hiring a qualified legal representative to help you manage your estate plan and ensure that it accomplishes all of your ultimate goals. Finally, make sure that the instructions you leave in your will and/or trust documents are up-to-date, clear and free of loopholes.