The inheritance you leave behind could become swallowed up by taxes or end up being owned by someone else. Thankfully, there are some powerful tips you can put into place today to help keep this from happening.
Your heirs won’t have to worry about paying anything in estate taxes if you have less than $18.58 million in assets in 2020. Therefore, it’s easy to assume that only those with assets beyond that really need estate planning, but it is a catastrophic mistake to not take the necessary steps to plan ahead for your own future and to protect your heirs.
Estate taxes are only part of the equation as it relates to your estate taxes. Heirs could also end up being responsible for paying federal income taxes on retirement accounts and in certain states, estate taxes too. By setting up a trust, checking your beneficiaries and drawing up a will with the support of an estate planning attorney, you can discuss opportunities to pass on assets to your loved ones but also protect them.
Trusts can offer substantial tax benefits and also add a layer of privacy to your estate plan. This is because after the money is transferred into an irrevocable trust, it is no longer part of your taxable estate, and instead the assets belong to the trust itself, meaning that the money inside is not subject to estate taxes.
Money inside a trust is also not subject to probate which can be extremely beneficial for ensuring that your heirs receive faster access to the money if this is important to you. You can set up necessary provisions to ensure that the intended beneficiary receives those assets and not someone else, such as a current spouse who ends up filing for divorce in the future.
Have other questions about estate planning in California? We can help with that over a phone call with our Pasadena estate planning office.