For years, the primary focus of most individuals who utilized estate planning was on ways to reduce estate taxes and ensure that more of their estate went to their heirs rather than the government. As the estate tax threshold increased from 2004’s $1.5 million to its current $5.45 million level, fewer Americans have had to worry about being subject to that federal estate tax requirement – or so it would seem. For Americans with business interests, high-value life insurance policies, and similar assets, the potential for incurring estate tax and other tax liability remains an important concern. The good news is that you can effectively manage your estate and tax planning by relying on the experts.
Do You Need to Have a Strategy?
If you’re like many people, one of the first things you might ask yourself is whether you even need to have a plan. A surprisingly large percentage of Americans seem to assume that these things just work themselves out on their own. How do we know that? For starters, fewer than one-half of Americans have a valid Last Will and Testament in place. Even fewer have trusts or other important estate planning tools that can help to better manage how their assets get distributed after death. When it comes to proper estate planning, we are a somewhat less-than-serious society – and that lack of seriousness can have devastating consequences for those we leave behind.
Without a plan in place, your estate could end up tied up in court after you die as the state works its way through the probate process. Your assets could end up being distributed in accordance with the state laws governing intestate deaths rather than your wishes. Even worse, your dependent heirs could be denied access to the support they need while they await the outcome of those probate proceedings. These things can be avoided with the right strategy in place.
Why Tax Planning Matters
How much wealth do you have? Many business men never stop to think about this question. Even those with large life insurance policies often fail to realize how that eventual payout might impact their estates after they die. The fact is that if you own a company or have substantial life insurance, pension, or other retirement accounts in your name, you may be wealthier than you know. And even if you don’t have enough wealth today to make your estate eligible for estate tax consideration, that doesn’t mean that your estate won’t face those or other tax challenges when you die. Just consider the following:
- If you have a business, the entire value of that enterprise is considered part of your estate. That means that when you die, its value is used when calculating whether your estate is subject to the estate tax.
- Life insurance can be just as tricky for many policy holders. Some people have multiple policies that pay benefits when they die. If those policies aren’t properly managed, they too could end up elevating the value of your estate and making it subject to that federal tax.
- Retirement plans must be properly managed as well to ensure that you know exactly what your estate will look like when you die.
- State taxes can come into play at death as well, since every decedent still has that last income tax return that needs to be filed. Is your estate organized to ensure that this filing can be done without resorting to asset liquidation to raise the necessary funds?
How an Attorney Can Help
The right attorney can help you with the estate and tax planning you need to ensure that your estate is organized in a way that minimizes taxes when you die. Done properly, this planning can provide you with a host of benefits that can help to shield your assets and enable you to pass on even more to your heirs – rather than giving the government yet another crack at wealth that it’s usually already taxed several times.
An estate planning attorney can help you to organize your assets and income in a way that protects them from creditors, minimizes tax consequences, and facilitates better wealth management and growth opportunities. Using tools like trusts and LLCs, you can obtain the security you need in a safe, legal way, and protect your wealth while you continue to build the type of legacy you’ll be proud to pass on to your heirs when you pass away.
Strategies that Work for You
In addition to tax planning, your attorney can assist you in developing business planning strategies that can provide for a clear transfer of control and ownership over time. That can be a great way to pass your business assets on to the next generation, prepare for retirement, and still give yourself time to ensure that the company you created will still be in good hands after you’re gone.
Your retirement planning should also be an essential component of your overall estate plan, since it too can affect every aspect of your estate planning strategy. A good estate attorney will have access to the most effective strategies for aligning your retirement plan with your estate and business planning to ensure that your tax strategies work as intended. The key here is to take a comprehensive approach to planning at every level, to develop a holistic strategy that puts every single one of these critical elements into their appropriate place.
At the Fouts Law Group, LLC, our estate and tax planning experts have the experience and expertise needed to help you create the ideal estate plan for your tax needs and end-of-life concerns. Our strategies can help to organize your financial assets to provide maximum protection from the estate tax and other tax liabilities, while securing your asset transfers to heirs and other beneficiaries when you die. If you want to do something more with your estate planning than just cross your fingers and hope for the best, contact us online or give us a call at (404) 596-7520 today.
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