A lot of the estate planning process focuses on reducing or trying to eliminate taxes. The government imposes a tax known as the Unified Gift and Estate Tax which puts a tax on the transfer of your property to others both during your lifetime and when you pass away. But not everyone will have to pay federal estate taxes. According to estateplanninglinks.com, “If your estate falls under the government exemption your trustee/executor does not have to file an estate tax return (Form 706) and pay the required tax within 9 months of your death.” It’s important to know what property will be included in your estate for federal estate tax purposes. The estate includes all property owned by the decedent at the time of death: investments, cash, real estate, vehicles, personal property, life insurance proceeds from policies owned by the decedent within three years of death, life insurance paid to the estate, retirement assets and business interests.
There are some estate tax exemptions that can be helpful. The first is personal exemption, The "personal estate tax exemption" allows a certain amount (or all) of a deceased person's estate to transfer free of the estate tax. Next, there is a marital deduction. According to findlaw.com. “A deceased person's estate can pass tax free to a surviving spouse, as long as the surviving spouse is a U.S. citizen and his or her interest in the estate is not a nondeductible terminable interest. A nondeductible terminable interest is an interest in the property that is held by someone other than the surviving spouse.” And lastly there are other deductions which include; against the gross estate include certain administrative expenses, funeral expenses, claims against the estate, certain taxes and other indebtedness and charitable bequests.
With everything that has to do with estate planning, you should always consult a professional. According to Forster, “Should you realize that your assets do fall under the category of taxable, you should start looking for an estate planning tax consultant. There are a lot of ways you can protect your possessions from taxation laws. Most of these methods include different types of trusts that will give you estate-tax exemption. Living trusts also allows you the freedom to control your possessions while living, and care for your spouse and/or heirs without having to go through months of probate.” It is best to have an estate planning adviser who can regularly update your trusts and will. He can also monitor any amendments in estate-tax laws and make any necessary adjustments. This way, your beneficiaries will be protected from any new laws that may prevent them from receiving your bequests.