Estate Planning and Tax Consequences
March 28, 2012 By John Rogers Burk, A Law Corporation
While the ability to decide who will receive your assets upon your death is certainly an important feature of estate planning, the ability to reduce, or even avoid, the tax consequences of transferring wealth and assets upon your death is an equally important facet of estate planning.
The ability to reduce, or even avoid, the tax consequences of transferring wealth and assets upon your death is an equally important facet of estate planning. If you fail to plan properly, as much as half of your estate assets can be lost to estate and/or gift taxes. Every dollar that is lost to taxes is one dollar less that you are able to leave to your family and loved ones when you die. By consulting with your estate planning attorney early, and often from here out, you can create an estate plan that takes into account the potential tax liabilities that can be incurred upon your death.
• Gift Taxes: When you make a gift to someone, whether it be in cash or another type of asset, that gift may be subject to the payment of gift taxes. Each taxpayer is entitled to make yearly gifts to as many people as he wishes up to an amount that is less than the current gift tax annual exclusion amount. For 2012, the exclusion amount is $13,000. In other words, you may make gifts of $13,000 each to many different recipients if you wish. You are also entitled to a lifetime exemption. The current exemption amount is $5.12 million, but is scheduled to return to $1 million for 2013. Gifts that exceed the yearly exclusion or lifetime exemption are subject to the gift tax. The gift tax rate is typically high. For 2012, the rate is 35 percent but will increase to the previous rate of 55 percent for 2013.
• Estate Taxes: Your estate assets must be inventoried and valued when you die. The value of those assets at the time of your death is then subject to estate taxes. As with gift taxes, there is an estate tax exemption which fluctuates each year as does the tax rate. For 2012, the exemption is $5.12 but is also set to be reduced to $1 million for next year. Also like gift taxes, the current tax rate is 35 percent but will return to 55 percent next year. An estate of a decent who dies in 2013 that is valued at $4 million dollars would lose a staggering $1.65 million as a result of the estate tax without proper estate planning.
ABOUT THE AUTHOR: John Roger Burk
Experienced estate planning attorneys Roseville CA of the John Rogers Burk, A Law Corporation offers estate planning and business planning resources to residents of Roseville CA.
Copyright John Rogers Burk, A Law Corporation
More information about John Rogers Burk, A Law Corporation
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
• Gift Taxes: When you make a gift to someone, whether it be in cash or another type of asset, that gift may be subject to the payment of gift taxes. Each taxpayer is entitled to make yearly gifts to as many people as he wishes up to an amount that is less than the current gift tax annual exclusion amount. For 2012, the exclusion amount is $13,000. In other words, you may make gifts of $13,000 each to many different recipients if you wish. You are also entitled to a lifetime exemption. The current exemption amount is $5.12 million, but is scheduled to return to $1 million for 2013. Gifts that exceed the yearly exclusion or lifetime exemption are subject to the gift tax. The gift tax rate is typically high. For 2012, the rate is 35 percent but will increase to the previous rate of 55 percent for 2013.
• Estate Taxes: Your estate assets must be inventoried and valued when you die. The value of those assets at the time of your death is then subject to estate taxes. As with gift taxes, there is an estate tax exemption which fluctuates each year as does the tax rate. For 2012, the exemption is $5.12 but is also set to be reduced to $1 million for next year. Also like gift taxes, the current tax rate is 35 percent but will return to 55 percent next year. An estate of a decent who dies in 2013 that is valued at $4 million dollars would lose a staggering $1.65 million as a result of the estate tax without proper estate planning.
ABOUT THE AUTHOR: John Roger Burk
Experienced estate planning attorneys Roseville CA of the John Rogers Burk, A Law Corporation offers estate planning and business planning resources to residents of Roseville CA.
Copyright John Rogers Burk, A Law Corporation
More information about John Rogers Burk, A Law Corporation
View all articles published by John Rogers Burk, A Law Corporation
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
