The inheritance you want to leave to your heirs could be eaten away by taxes and expenses. But there are strategies to prevent that.
A story in US News lists five strategies to help keep your money in your family — even though if you are single you can have up to $5.45 million in assets before your heirs have to worry about paying estate taxes.
The bigger issue, for those not super wealthy, is managing the step-up in basis on inherited assets and income taxes, the article says.
The step-up in basis refers to how assets such as investment property and second homes are valued and taxed after a death and how taxes are levied against traditional IRAs and 401(k)s inherited by someone other than a spouse, according to the story.
Many people don’t realize their states may have lower exemption caps than the federal figure, it notes.
Steps as listed in the article:
- Draw up a will
- Check your beneficiaries to make sure they are up to date
- Set up a trust
- Convert traditional retirement accounts to Roth accounts
- Gift money while you are alive.
If you have questions about estate planning, feel free to contact us for a consultation at (626) 696-3145.
