Inheritance tax planning is one important step you need to take in order to provide the largest possible estate for your loved ones to inherit. Aside from planning for taxes, there are many more things you need to do in order to protect the legacy you want to leave for the people who you love and for causes that you wish to support.
A Burlington inheritance tax planning lawyer can provide assistance with addressing tax issues through the creation of a comprehensive estate plan.
We also provide representation and advice when it comes to all other estate planning matters that could affect you and your heirs. Everyone should get help with inheritance planning if you care about the estate you will leave behind for your family and friends. Call Unsworth LaPlante, PLLC to find out more.
Why is Inheritance Tax Planning Necessary?
Inheritance tax planning involves trying to shield your heirs from having to pay taxes when they inherit money. In Vermont, and on the federal level, the tax which is assessed is called an estate tax (rather than an inheritance tax). The amount which is due is based upon the value of the estate and the tax is generally paid out of funds and assets from the estate.
While this has the effect of reducing the amount an heir inherits, heirs don’t have to pay the estate tax directly. Instead, the tax is paid by the executor of the estate, who must complete a Vermont Estate Tax return using Form E-1.
Estate taxes are not assessed on every estate within Vermont. Estates below a certain dollar value are not taxed. Vermont’s laws and excludable amounts differ from IRS laws on estate taxes. The IRS does not impose estate taxes on an individual’s estate unless it is valued at $5.45 million as of 2016. In Vermont on the other hand, taxes are assessed once estates exceed $2.75 million.
The federal government also allows spouses to share their estate tax exemptions. In other words, if a husband leaves all his money to his wife, he does not use any of his $5.45 million exemption because estates are allowed to pass tax-free to a spouse. His wife now has her own $5.45 million exemption and her husband’s $5.45 million exemption and can pass an estate of up to $10.9 million without estate taxes. This is not the case in Vermont.
What is Involved with Inheritance Tax Planning
Inheritance tax planning should generally take into account both the federal and state rules for estate taxes. For example, while an effective tax plan to avoid federal taxes may be for each spouse to leave an estate to a surviving spouse and then for the last surviving spouse to leave assets to shared children, this plan would provide protection only from federal estate taxes. When it comes to avoiding estate taxes imposed by Vermont, different rules would apply.
It is sometimes possible to structure the ownership of assets to facilitate the transfer of those assets outside of probate and to make sure the assets do not count in determining the value of the estate. This is one of many different things to consider as part of inheritance tax planning.
An attorney with experience in the area of inheritance tax planning should assess your situation to determine if state and federal estate taxes must be paid or not. Your attorney should then provide you with advice on the different legal tools which it is possible for you to make use of in order to try to reduce or eliminate the assessment of an estate tax after you have passed away.
How a Burlington, VT Inheritance Tax Planning Lawyer Can Help
Everyone should be able to leave a strong legacy without worrying about taxes taking away the value of their estate and without worrying that heirs will be unable to handle the gift that is given. Creating a plan for your assets and property after your death is very important to ensure that you are able to enrich the lives of the people you love and to ensure a gift you leave behind is never a burden.
To find out more about the options available to you to protect your assets and your legacy, contact Unsworth LaPlante, PLLC today about inheritance tax planning and other inheritance planning issues. Our Burlington Vermont estate planning attorneys will help you make effective use of legal tools available to you. Give us a call now at (802) 879-7133 or contact us online today to learn more.