Estate taxes: what you should know

Estate taxes are taxes levied on the estate (i.e., the total property and assets) of a deceased individual. These taxes are paid by the estate itself before the distribution of assets to heirs and beneficiaries.

Estate taxes are often a contentious issue, as many people view them as an additional burden on families already dealing with the loss of a loved one. However, estate taxes only apply to estates valued over a certain dollar amount.

The United States has a federal estate tax, which is currently levied on estates valued at over $12.92 million for individuals and $25.84 million for married couples. The tax rate starts at 18% and increases to 40% for estates valued at over $1 billion.

Some states also have their own estate taxes, but California does not. It’s important to consult with an estate planning attorney to understand how estate taxes may impact your specific situation.

There are several strategies that individuals can use to minimize their estate tax liability. One common approach is to make gifts to heirs and beneficiaries during their lifetime, thereby reducing the size of the estate. There are also various trusts and other estate planning tools that can be used to transfer assets in a tax-efficient manner.

It’s worth noting that estate taxes are a complex area of law, and there are many nuances and exceptions that may apply depending on the specific circumstances. It’s important to work with a qualified estate planning attorney to ensure that your estate plan is structured in a way that minimizes your tax liability while achieving your overall estate planning goals.

In conclusion, estate taxes are a significant consideration for individuals with sizable estates. While they can be a burden for families dealing with the loss of a loved one, they can be minimized with careful planning and the help of a qualified estate planning attorney.