Can you avoid estate taxes? There are some ways to do so. We will look at two ways to reduce your estate taxes.
There are two different ways in which your estate can be taxed: by the federal government or by your state. Not every state has estate taxes, and those states that do tax at different percentages. Texas, for instance, does not implement an estate tax.
Some states do have inheritance taxes, and these are not the same as estate taxes. Whereas an estate tax comes out of the estate, an inheritance tax is paid by the person receiving the money or asset.
In terms of the federal estate tax, your gross assets must exceed $11.7 million for the 2021 tax year or $12.06 million in the 2022 tax year to be subject to estate tax. Regardless of why you are looking to minimize your tax liability, there are methods available for you to utilize. It is important to note that some of these approaches may be simple in theory but complex in actual practice. Meeting with an estate planning attorney is a vital component of ensuring that your assets are protected.
State Taxes
As previously mentioned, Texas will not tax your estate regardless of its value. At the moment, there are more than 15 states that have either estate taxes or inheritance taxes. Maryland, for instance, has both.
Anyone about to retire could consider moving to a state with no estate or inheritance taxes. Most people think about income and property taxes when they relocate, and rightfully so.
Estate taxes can be a factor as well. If you think that moving to another state may be one instance where you don’t need to consult an estate attorney, you may be wrong. What happens if you own more than one property in more than one state? If you wish to establish residency in one specific state, you should meet with an attorney for legal guidance.
Limiting Your Assets Can Help Avoid Estate Taxes
The fewer assets you have, the less there is to tax. While you may not be able to avoid estate taxes altogether, you can limit them. Though a reduction in assets seems reasonably straightforward, it does entail spending your money in such a way that you don’t inadvertently add assets. For example, buying additional property could potentially make your estate worth more.
You also can give away assets while you are still alive. There are limits on how much you can give each recipient or charity per year without being taxed. When you sit down with your estate planning attorney, you can discuss assets you plan on giving away. He can advise on the potential tax liability your gifts could be subject to.
Get Legal Guidance Before You Make a Move
Estate planning is your means of taking complete control of your assets. At Amsberry Law Firm, we understand and appreciate how hard you have worked and your desire to pass these things to the people you care about the most. Before you make decisions that may impact your estate or how your estate could be taxed, contact our team to schedule your free consultation. Our estate planning attorney can also help review other ways you might be able to ensure your wishes are met.
Attorney Russell J.G. Amsberry
Attorney Russell J.G. Amsberry founded the Amsberry Law Firm in 1995 with the goal of providing clients with exceptional, focused representation on their issues. His success as a legal advocate has been reflected in the numerous professional honors he has received, such as speaking engagements and inclusion in Scene in SA magazine’s listing of the best lawyers in San Antonio, a Distinguished rating from Martindale-Hubble, and an amazing rating from Avvo. [ Attorney Bio ]
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