Do you need to address estate taxes in your estate plan?

On Behalf of | Jun 12, 2020 | Firm News |

The more assets you have, the more careful you have to be with estate planning. From taking great care to avoid infighting it by your heirs and beneficiaries to ensuring the smooth transfer of certain accounts or assets through special designations, you may have to do a lot more estate planning work than someone who only has a bank account, a life insurance plan and maybe some home equity.

The more valuable your total estate is, the more likely it is that you will have to worry about estate taxes. At what point does your estate become vulnerable to taxation in the state of Tennessee?

Only very large estates are subject to estate taxes

The federal government is particularly lenient when it comes to the collection of estate taxes. For those who die in 2020, the total value of their estate will have to be $11,580,000 or more in order to be subject to the progressive federal estate tax. Tennessee no longer levies an estate or inheritance tax.

How to protect against estate taxes

Reducing your risk for estate taxes is a pretty straightforward process. You just need to diminish the value of your estate. There are two ways to achieve that goal.

The first is to hand out gifts to your family members and heirs before you die. They have the benefit of their inheritance earlier in life when they may need it and you get the joy of watching them benefit from those assets. You can carefully structure such giving to avoid taxation, although that may require many years of giving to your loved ones. The second tactic involves placing assets in a trust.

Some people use a combination of both of these methods. Looking carefully at your family circumstances and the value of your estate with your attorney can give you a better idea of which options will work best for you.