The right time to planning estates is when alive, but unfortunately, this cannot always be done. This is when beneficiaries end up owning large estates and with huge taxes to pay. Good news is that even after the death of the person, you can evade huge sums as tax payments.
The person dying is now allowed to pass on $ 2 million in assets and the person receiving this is exempt from the estate tax. This exemption also includes life insurance proceeds received, gifts in excess of the annual exclusion, which is now at $12,000 and the value of all the investments and property of the descendant on the day of death. So how to plan your estate taxes? It is not as difficult as you may think it is. The first thing to do is value the assets of the benefactor.
You should do so in the lowest amount that you can. If the deceased did not have total control of the assets or there is no controlling interest vested in the ownership. Then a minority discount or 'one for a lack' marketability can be considered to reduce the value of the property. These are simple methods of acquiring a discount on the assets value.
You can avail of these discounts by calculating the value of the property based on the actual use rather than the highest and best use. For example: if the said property is a farmland and its value is estimated at $2,600,000 and when used for farming the value of the farmland is only $1,300,000 then the value that can be included in the estate will be $1,700,000. This is because $ 900,000 is the maximum discount that is allowed. However, in this way you are able to reduce the value of the asset.
Another method that one can use is a disclaimer by which one can redirect the assets. In this manner, the beneficiary chooses to write off or disclaims all or part of his inheritance and allows the other beneficiaries in the will to have access to the assets. You have to remember that you can disclaim the assets. This will enable the beneficiaries to enjoy their inheritance as well as reduce the amount of estate taxes that they would have otherwise been compelled to pay.
The executor fees can also be saved in the case of estate taxes. This can be done when a family member is made the executor. The more the fees, the higher your savings and the maximum the beneficiaries can deduct from the executor's fee is 46 percent. However, the maximum income allowed to the executor is 35 percent. The family can save 11 percent or more of the fee amount.
It is by using simple methods that one can save oneself from estate taxes even after the death of the death of a loved one who has made you heir to the assets. If you are able to follow any of the above methods, it can help you plan your estate taxes and help you save a considerable amount of money.
