We work our entire lives to save money, build our estates and leave a legacy behind to our children. The thought that a massive chunk of our estate will get consumed by the government can be particularly troubling. As such, estate planning lawyers have devised a host of strategies that can help families reduce their estate tax burdens over the years. But are these strategies even necessary in 2018?
Inheritance and estate taxes are a valid concern for many Tennessee residents. However, for 98 percent of the American public estate taxes will be zero. Although complicated trust arrangements may have been necessary in the past to avoid estate taxes, in 2018, they will not be required for those who have estates valued at less than $11.2 million.
This means that you will likely be able to pass down your wealth to your heirs without any federal estate taxes applying to your assets. If your estate exceeds $11.2 million, on the other hand, then any amount in excess of this exemption will receive a tax of 40 percent. As such, individuals with this level of wealth may want to consider various planning strategies like the creation of a trust, gifting assets while you're alive and other options.
If you are concerned about your estate and what kinds of taxes could apply to it? Make sure to brush up on state and federal tax laws. If you find that your estate will be vulnerable to taxation after you die, then various strategies will likely be available to help you minimize your tax burden considerably.
Source: Entrepreneur, "The 7 Most Common Estate-Planning Myths," accessed Feb. 16, 2018