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Benjamin Franklin said that the two surest things in life were death and taxes. When you pass away, your loved ones are going to be faced with both at the same time! While you have worked hard for your money and you should take the time to enjoy it, there are still certain things you can do to keep your family from struggling with the estate taxes.
How To Tell If Your Estate Will be Subject to Taxes When You Die
Nolo, a company striving to help individuals plan their estates themselves, describes certain instances in which your estate will have to pay taxes. According to Nolo, the amount is the key. If the worth of your property is over a certain amount, then yes, your estate will have to pay taxes. Nolo says that property left to a spouse, however, is not taxable if the spouse is a citizen. Also, any property that you leave to a tax-exempt charity is also not taxable.
Easing the Pain with Gifts
Your loved ones will suffer enough when you leave them. Don’t make it worse on them by leaving them with legal issues and tons of taxes. Do what you can now to prevent your loved ones from being taxed. Nolo claims that federal gift and estate taxes are in the process of being phased out, but there are still no guarantees. According to Nolo, an individual can give as many $11,000 cash gifts or other properties each year as they want without the gifts being taxed. The way it works is that no single person can receive more than $11,000 a year.
Taming the Taxes with Trusts
One trust that Nolo recommends to save your estate taxes is the AB trust. Basically, you leave your property in an AB trust that your spouse can live off of during his or her lifetime. When your spouse passes, the property often goes to the children or the ultimate beneficiaries that the spouse can name.
Conclusion
Planning your estate is not an easy thing. Still, for the sake of your spouse and your children, you should make wise decisions that will benefit them down the road. After all, you are not just passing on your assets; you are passing on your legacy.
