Estate taxes are charged on certain estates. Whether an estate will be taxed or not depends upon the value of the estate. There are different arguments both for and against estate taxes, or death taxes, as they are sometimes called. If your estate will be taxed, you may wish to take steps to try to reduce the taxes or even eliminate them altogether. A Burlington estate planning lawyer can help.
Unsworth LaPlante, PLLC provides extensive assistance with creating a comprehensive plan to protect the value of your estate and to preserve your legacy. Working to reduce estate tax obligations is one aspect of the process. Give us a call today to learn more.
Why Are Estate Taxes Charged on Certain Estates?
Under federal law, estate taxes are charged when the value of an estate exceeds $5.45 million. The excludable amount below which estates are not taxed adjusts upward periodically, and the Internal Revenue Service (IRS) has information on the current excludable value which will apply in the year of the death.
As of 2011, married couples can pass their exemption on to each other, in addition to passing their assets tax-free to spouses. This means the first spouse to pass away could pass all of his or her money on to the surviving spouse. He would not have used his exemption, so the surviving spouse could pass on $10.9 million tax free (her own exemption and her deceased husband’s exemption).
There is substantial controversy over whether estate taxes are justifiable and appropriate or not, and there have been repeated efforts to repeal the estate tax. However, the estate tax continues to persist under federal law. There are also estate taxes assessed in Vermont, although many states have stopped collecting estate taxes in recent years.
There are different arguments which can be made both for and against estate taxes. Those who oppose this tax, which they call a death tax, believe that income has already been taxed during the deceased person’s life, and believe that the deceased has already paid tax on many of the assets in the estate. The argument is made that it is not fair to tax the wealth again just because the deceased person has passed away and is giving money to heirs.
However, there are also reasons why estate taxes exist. In one Wall Street Journal editorial, for example, it is argued that the government needs the revenue and that the small number of people who inherit large estates can afford to pay the taxes to support the public trust. The Journal also suggests that passing large estates on untaxed could result in a concentration of wealth and is not in keeping with the spirit of America, which stands for equal opportunity for all.
Should You Try to Reduce Estate Taxes?
Regardless of the politics behind estate taxes, many people do try to avoid these taxes. Estate tax avoidance can be very important if you want to maximize the value of an inheritance which your heirs will receive. You may not want a large tax bill to take the money out of your loved one’s hands and put the money in the hands of the government instead.
If you have a farm or a family business, trying to reduce or avoid estate taxes can be even more important. Your company or farmland may be pushing your estate over the excludable value, and there may be limited cash not tied up in farmland or business assets. The Washington Post reported on farmers having to sell acreage after a death to keep the family farm and pay the estate taxes, and this can be detrimental to your legacy.
Ultimately, you will need to decide if you want to try to avoid estate taxes and if there are legal options for you to do so. A Burlington estate planning lawyer can help you to look at the different possible approaches you could take to tax avoidance if you decide that path is right for you.
How a Burlington Estate Planning Lawyer Can Help
You do not want your heirs to lose a large portion of their inheritance as a result of estate taxes. Let Unsworth LaPlante, PLLC help you to try to explore ways to reduce the amount of taxes which will be owed or to try to transfer your assets without incurring estate taxes. You can join us for a free seminar to learn about how to avoid estate taxes and create a comprehensive legacy protection plan. You can also give us a call at (802) 879-7133 or contact us online to get started on creating your personalized plan.
- 10 Estate Planning Tips to Help Your Plan Succeed - September 7, 2023
- What Bruce Willis Can Teach Us About Incapacity Planning - August 29, 2023
- What You Need to Know about an Inherited IRA or 401(k) - August 17, 2023