Estate planning is important for everyone, but once your estate hits near $1 million, it gets more complex.
Unless your estate is worth more than $5.43 million – $10.86 million for a married couple – you are exempt from federal estate taxes. But some states impose their own at a lower threshold.
An article in Forbes says there are a few things to pay attention to. These include:
- Understanding wills vs. trusts
Most people start with a will. They are easy and inexpensive. But for those estates that are more complicated, such as those worth at least $1 million, a will may not be enough. Trusts must be considered. They keep your information private, for one thing. There are several kinds. Living or revokable trusts are popular. They can be changed while you are alive.
- Give while you are alive
You can start giving away money while you are alive. You can give $14,000 per year or $28,000 per year per couple to a child, grandchild or anyone else without it counting as a gift under the federal gift-tax exclusion. For every dollar you move out of your estate, your heirs save 40 cents in taxes.
Irrevocable trusts are an option for some
If your assets grow past the $5.43 million threshold for federal estate taxes, you may want to consider an irrevocable trust. Assets are removed from your estate. What you put into the trust counts against the threshold, but not growth or appreciation. That growth occurs outside your estate.
If you have questions about estate planning, feel free to call us for a consultation at (626) 696-3145.
