A comprehensive estate plan should take into account more than just what assets you want to give to whom when you die. Among the issues that must be considered when creating an estate plan are the tax consequences of your plan. Failing to factor in the impact taxes can have on your estate plan could have serious negative consequences.
In America, just about everything from birth to death is potentially taxable. Although we all know this, people often forget about the potential tax consequences of death. This can lead to using do-it-yourself estate planning forms that offer no guidance with regard to the tax consequences of gifts made pursuant to the form. In the end, an estate can lose a significant amount of assets to taxes that should have gone to the deceased’s loved ones.
Avoiding these tax pitfalls is relatively easy when you work with an experienced estate planning attorney. Although assets held by a decedent at the time of death are potentially taxable, there are numerous ways that estate and gift taxes can be avoided or reduced with proper planning.
For anyone with considerable assets, the transfer of wealth should usually begin long before death to ensure that as much as possible is transferred tax-free. Trusts are also an excellent estate planning tool that can not only offer tax and probate avoidance but can also allow you to decide how your assets will be used long into the future.
The important point is to remember that tax planning should be an integral part of estate planning. To ensure a positive outcome, be sure to consult with a knowledgeable estate planning attorney.
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