Taxes are in the news of late. There is one particular tax that gets a lot of press – the “estate tax”. Let’s look at the facts about estate taxes today – what in the heck is the “estate tax”?
Small business owners and families alike face a variety of issues throughout life. Taxes come into play while we are living and for beneficiaries upon death. Estate taxes are often called the “death tax”. Families often fear economic hardship by the “death tax”, believing they will face selling assets or take out loans to pay an estate tax bill.
The Tax Policy Center estimates 5,460 individuals who die this year will have to pay an estate tax, as the estate tax applies to the richest 0.2% of US households. This tax is levied only on individual estates worth more than $5.4 million after deductions and credits. While many of us strive for millions in total net worth of businesses or personal net worth, it is important to recognize the numbers applicable to you based on federal and state guidelines.
Yes, it can be confusing to keep up to date with the federal and state policies about estate taxes. Motley Fool recently reported that the majority of states don’t have an estate tax, but 14 states plus the District of Columbia do. Moreover, six states have inheritance taxes that apply to the recipients of gifts.
Among the states that have their own estate taxes, the exemption amounts are often much lower than the federal exemption of $5.49 million. New Jersey taxes estates as small as $675,000, while Massachusetts and Oregon have exemptions of just $1 million. Those limits are low enough that many more people should plan their estates with state taxes in mind. It is important to review your individual situation annually with legal, financial and tax professionals to understand how all taxes (including the estate tax) may impact your individual situation.
Consider your options as you prepare your estate plan. Be prepared to discuss financial issues as an integral part of estate planning. This is a gift you give yourself while you are living and for your beneficiaries after you’ve gone.
Life happens, expect the unexpected, plan the work, work the plan … now is as good a time as any! When you’re ready for an outside eye to work on contingency plans for work and home, contact us.
We proactively help you assess your situation in business and home and explore ways for you to protect what is important to you by asking questions. What is your risk? Your plan? Are you ready to be ready? Proactive preparation is our forte.
Contact us to learn more about how we work with individuals, business owners and employees via Email or online @ The Living Planner #ExpectTheUnexpected #CareForPeopleCareForBusiness