If you have a sizeable estate and plan to leave a multi-million dollar inheritance for your heirs, you need to ask yourself whether federal estate taxes will apply to your situation. If your estate is likely to be taxed, any amount above the federal estate tax exemption will be hit docked by 40 percent; therefore, you will probably want to take swift action to protect your estate from this exorbitant tax burden.
As for individuals who die in 2017, federal estate taxes will only apply to your estate if it totals over 5.49 million. Up until this amount, you can pass on wealth to your heirs tax-free. Estate planners should be reminded: If your estate looks like it could be more than $3 million, you'll want to be especially careful about different assets in your estate that could have increased in value since you purchased them -- like real estate, collector's items and art. Your estate might be more valuable than you think.
One strategy to bring your estate down below $5.49 million is to give some of your money away while you're alive. However, you'll be limited to how much money you can give away. Specifically, you can give up to $14,000 away annually per person. You can give $14,000 to as many people as you want. If you're married, your spouse is also entitled to $14,000 per year.
Let's say you have four children and eight grandchildren. Between you and your spouse, you could give $28,000 to each of them every year. That would allow you to give away $336,000 a year. Do you see how this could help bring your estate value down after several years of planning?
Tennessee spouses can do a lot to lower their estate tax burdens. By speaking with an experienced estate planning lawyer, you can discover what estate planning strategies are appropriate for you and your family's needs.
Source: Forbes, "IRS Announces 2017 Estate And Gift Tax Limits: The $11 Million Tax Break," accessed July 11, 2017