Estate taxes can create substantial burdens for family members in the wake of a loved one’s death. At Romano & Sumner, we help individuals plan their estates to mitigate (or avoid) estate tax liability, and we represent personal representatives and family members in estate tax matters during probate administration.
Estate taxes can create substantial burdens for family members in the wake of a loved one’s death. At Romano & Sumner, our estate litigation attorneys help individuals plan their estates to mitigate (or avoid) estate tax liability, and we represent personal representatives and family members in estate tax matters during probate administration.
Whether you are preparing your estate plan or dealing with the estate administration process, it is important not to overlook the potential tax implications involved. Under federal law, all Americans are potentially subject to an estate tax, and this tax can be as much as 40 percent of the value of your taxable estate after death.
The good news, for many people, is that the estate tax only applies to high-net-worth individuals. As of 2017, the Internal Revenue Service (IRS) only taxes estates with a value in excess of $5,490,000. Additionally, through the use of trusts and other estate planning tools, it is possible to reduce the amount of your taxable estate; and, with careful planning, many people can avoid the estate tax entirely.
Of course, in some situations, estate tax liability will be unavoidable. Maybe there simply were no viable options for completely avoiding tax through estate planning and lifetime gifts; or, perhaps your loved one did not take full advantage of the tax mitigation strategies he or she had available. Whatever the case may be, if you are concerned that your loved one’s estate may have to pay estate tax as part of the probate administration process, it is important that you discuss your situation with an experienced attorney.
At Romano & Sumner, we bring more than 20 years’ legal experience to representing individuals in estate planning and estate administration. Our attorneys are intimately familiar with the IRS’s estate tax laws and regulations, and we have helped numerous individuals and families with a wide range of estate-tax related issues. If you are ready to put together an estate plan, or if you need help probating a loved one’s estate, we can help make sure you meet your obligations to the IRS while minimizing you and your loved one’s tax burden as much as possible.
Maybe. As we mentioned above, estates with a value of less than $5,490,000 are exempt from estate tax liability. If your loved one’s estate is exempt, then you do not need to file a return. However, there can be benefits to filing a return even if no tax is owed. For example, if your loved one was married at the time of death, filing what is known as a “portability return” can transfer the deceased’s exemption to his or her spouse. As of 2017, this means that the spouse’s exemption would increase to nearly $11 million.
For estate tax purposes, the value of a decedent’s estate is determined by the combined “fair market value” of all assets in the estate. As stated by the IRS, this is “not necessarily what you paid for them or what their values were when you acquired them.” Assets that are potentially subject to estate tax include (but are not limited to):
Yes, to a certain extent. While making lifetime gifts is one option for reducing estate tax liability (assuming it otherwise meets with your estate planning objectives), there are a variety of limitations and restrictions involved. Certain gifts (such as gifts to your spouse and gifts below your annual exclusion) have more tax benefits than others, and anyone considering substantial lifetime gifts should discuss their gift-giving strategy with an estate planning attorney.
Under IRS regulations, estate tax returns (including portability returns) must be filed within nine months of the date of death.
A will is a document that allows you (as the “testator”) to name the heirs you wish to receive your real and personal property upon your death. Within your will, you may also name who will care for your minor children (if any), who will settle your estate upon your passing (the “executor”), and the manner in which you wish to be laid to rest (such as funeral arrangements, cremation, etc.). Probate is an issue when property is passed via a will. There are certain requirements for a valid will in Texas that must be met. Having the right estate planning lawyer in Sugar Land can make all the difference.
A trust may be either revocable or irrevocable. In either case, you as the “trustor” create the trust. Typically, the trustor than acts as the “trustee” during his or her lifetime, and a successor trustee is named to fulfill the terms of the trust upon the trustor’s passing. Probate may be avoided, as there is no transfer of title required for any asset within the trust. The trust “owns” the property. The trustor as the original trustee, and then the successor trustee, merely manages the assets as per the trust terms. Read more about trusts.
A power of attorney allows another to act on your behalf in financial matters if you become incapacitated. Powers of attorney may be very specific or general in nature and are in effect only as long as your are incapacitated.
An advance health care directive allows an individual to arrange for the type of health care options to be administered to that person, should he or she become incapacitated. You may name an individual to make the decisions you cannot make for yourself and leave specific instructions to your doctors as to the nature of the treatments you wish to receive or refuse to receive.
Certain assets are transferred immediately upon the death of an individual by operation of law. Examples include life insurance proceeds, assets held in joint tenancy with the right of survivorship, and assets held in accounts with a pay on death (“POD”) beneficiary. For more information, schedule a free consultation with our estate planning attorneys.
For high net worth individuals, a family limited partnership is an estate planning tool. This involves the formation of a business entity that can be used to transfer assets from one generation to subsequent generations, while also providing significant creditor protection. Read more about family limited partnerships.
If you have questions about estate tax, we invite you to schedule an initial consultation at our offices in Sugar Land, TX. To speak with an attorney in confidence, please contact us online today.
The estate planning attorneys at Romano & Sumner cover the following services to create a comprehensive plan for your assets, and a sense of security for you and your loved ones.
Romano & Sumner – Sugar Land, TX Attorneys