Many people consider estate taxes to be the biggest reason for estate planning. While that is not currently the case, it may have once been the case. Over the years exemption amounts for taxable estates have changed around a lot. The exemption amounts we have now are supposed to be permanent, but will they be?
How much is the tax? Right now both estate and gift tax rates are at 35% which is already pretty steep but this year the current tax law is set to sunset, so if Congress doesn't extend the provisions, rates may jump up. Estate tax rates used to be as high as 50% with an exemption as low as $60,000. The law is not supposed to change any time soon, but in the past exemption amounts have consistently stayed closer to around one million dollars of total exemption amount, which sounds high but you'd be surprised to find how easy that is to hit.
It is projected that the average retiree will need a little over $1,000,000 in savings in order to live comfortably in retirement and not outlive their money. So that alone could put someone over the exemption amount, not to mention life insurance, properties, and business interests. By planning ahead a family can avoid estate taxes through various strategies meant to keep the taxable estate under federal exemption amounts. Irrevocable trusts, marital trust provisions and valuation strategies can all be used to effectively avoid most if not all tax liability from your estate.
If you would like to learn more about how to save your legacy from being taxed away, contact us at (801) 477-1570 for a free consultation. We always say estate planning isn't about what you own- it's about what you value, but proper planning should preserve what you own for what you value most- your family.
"Let Us Earn Your Family's Trust!"