If you have a large estate with adjusted gross value coming to a minimum of $5.34 million starting 2014, a big chunk of it will be gobbled by the federal estate taxes. Although there is no state inheritance tax in Arizona, any trusts and estates exceeding state exemption will result in you paying income taxes. The list of other taxes includes property taxes, gift taxes, and generation-skipping taxes. A professional estate planning attorney can help you stop these assortments of taxes from reducing the wealth your heirs are supposed to receive.
Tax-free gifts and distribution of assets
As per the current tax rules, gifts up to a maximum of $14,000 are free from any kind of tax obligation. You can reduce the size of a big estate and also transfer assets to any individual of your choice before you die. You can also donate to educational institutions and health care providers for the purpose of education and expenses due to health care for your family members respectively. Always consult your estate planning attorney if you wish to avoid the pitfalls, which might keep you away from gaining potential benefits.
Creating a ‘trust’ to avoid estate taxes
You can easily transfer assets from the estate through a number of irrevocable trusts. The assets will no longer be owned by you and all papers will point out the trust as the owner. However, you can still benefit from trust formation. These are the few kinds of irrevocable trusts, which can be utilized to minimize your estate’s taxable size.
Qualified Personal Residence Trust (QPRT)
In a QPRT, no other assets can be held by the trust except your home. You hold on to the right of using your home even after you sign it off to the trust.
It is made to benefit your children or spouse. If it is a spousal trust, funds are taken away from the estate. The spouse can draw on trust, restricting it only to household income. If your spouse dies, the trust could be easily transferred to your children, without imposing any new estate taxes. If an identical arrangement is made for children, it is termed as a spray trust or a sprinkling trust.
If you would like more information on how a trust can help preserve your assets to preserve your families legacy. Contact the professionals at Wealthnest Planners conveniently located in Chandler, Arizona. www.wealthnest.com or 480-699-5275
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized legal advice. We suggest that you discuss your specific situation with a qualified legal advisor