Estate Tax Planning: Information From A Texas Attorney
While there is no state estate tax in Texas, federal estate tax laws do apply. The estate tax, which people commonly refer to as the “death tax”, is charged to the estate of a person after they have passed away, which means the beneficiaries of the estate can be left with significant tax consequences. The federal estate tax applies to all assets, whether cash, real property, IRA accounts, or any number of other assets.
Each year, the federal estate tax exemption changes; for 2021, it is set at $11.7 million for individuals, and $23.4 million for married couples. This means that any estate which is valued under that amount will not be subject to estate tax. For estates valued over the exemption amount, a tax rate of 40% will apply to the amount of assets in excess of the exemption amount.
Understandably, many people worry about how the estate tax will impact their beneficiaries. No one wants to feel as though the assets they’ve worked hard to obtain will end up in the hands of the federal government. Those assets should end up in the hands of the ones you love, in the precise way that you plan.
The good news is that there are options. This article offers an overview of some of the most common ways to avoid or reduce estate taxes. A competent and highly experienced estate tax attorney is well-equipped to dive into the details of your specific circumstances.
Strategies For Avoiding Or Reducing Estate Taxes
With the help of an experienced tax attorney, you can determine the best and most convenient strategy for reducing or eliminating estate tax, which means leaving more of your hard-earned assets to your loved ones. There are several ways to do this, including the following:
If you were to a give a certain amount of your assets to your beneficiaries over the course of your lifetime, then you could minimize the estate tax by keeping the value of your estate below the exemption amount.
Since there is no gift tax in the state of Texas, you would only need to consider the federal gift tax, which is set at $15,000 for 2021. This means that you could gift up to $15,000 to your loved ones this year, and in turn, reduce the value of your estate. By gifting on a regular basis throughout your lifetime, you could reduce or eliminate the burden of estate taxes.
There are several types of trusts that can help you avoid or reduce estate taxes, including the following:
- Marital Trusts – If you are married and place your assets in a marital trust, then those assets would not be subject to federal estate tax. As a surviving spouse with a marital trust, you could also take advantage of tax and credit shelter benefits for your heirs.
- Irrevocable Trusts – When you put your assets into an irrevocable trust, you no longer own those assets. Since the assets would no longer be owned in your name but instead held by the irrevocable trust, they would not count toward the value of your estate for the purposes of estate tax. Before choosing this strategy for eliminating estate tax, it is best to speak with an experienced estate tax law attorney who can cover the benefits and drawbacks.
- One type of irrevocable trust is called a Grantor Retained Annuity Trust, which would allow you to pass a large amount of assets to your beneficiaries without worrying about a gift tax. These types of trusts are particularly useful for high-net-worth individuals who would otherwise deal with a very high estate tax upon their death.
- Qualified Personal Residence Trusts (QPRT) – If you own a home and would like for it to ultimately be given to your beneficiaries upon your death, you might consider a QPRT. By placing your home in this type of trust, you would be able to maintain ownership of it during your life, but it would be automatically transferred to your beneficiaries once you die. This type of trust would effectively reduce the size of your estate, and thereby reduce your exposure to taxes.
Estate Tax Attorney In Round Rock, TX
Attorney Gerald Winters is unlike most attorneys, especially when it comes to tax law. This is because prior to becoming an attorney, he ran a business as a CPA, and has over 20 years of experience in financial management, tax law, and business consulting.
With an extensive background in the area of tax law and estate planning in Texas, he stands out from the rest. He can provide you with a high level of expertise, but never at the expense of compassion and a true desire to help you reach your estate planning goals. This means taking the time to explain the technical aspects of the law so that you aren’t just following his advice without knowing why, but participating actively in planning for your future and the future of those you love.
Attorney Winters understands that each client brings a unique set of circumstances and needs to the table, so he always takes an individual approach to every estate tax planning case he handles.
He also understands the importance of protecting the assets that you’ve worked hard to acquire over your lifetime, and the value in knowing that they are protected from estate tax to the greatest extent possible for the benefit of your loved ones.
Attorney Winters will carve out the time necessary to provide you with the highest level of legal representation, and keep in touch with you as time passes to make sure that you haven’t acquired additional assets that need to be shieled from the reach of federal estate tax.
Don’t wait any longer to put your estate tax concerns to rest. Find out what you can do to eliminate or minimize your estate tax, and benefit your loved ones in the process.
Let Winters Law Firm help. Call estate tax planning attorney Gerald Winters for a consultation today at (512) 400-0038.
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