Taxes still happen even after death. Unfortunately, because estate taxes are constantly changing, even if you plan for taxes your estate plan may fall short 10 years later. That is why it is important to hire a skilled estate planning attorney San Antonio that stays on top of new estate tax laws and helps you update your will to account for those changes.
While your estate planning attorney will know which taxes affect your estate, you should do your due diligence and understand the common taxes and how they will affect your heirs.
Gift Tax
Gift taxes are frequently ignored and shouldn’t be. They can affect your heirs significantly. As of 2014, the IRS exempts $14,000 in gifts each year, but once you give over $14,000, the remainder can be taxed. Taxable gifts must be reported on a tax return, which your estate planning attorney in San Antonio can assist you with or you can visit your local CPA.
Federal and State Estate Taxes
In 2014, the federal estate tax was $5,340,000. Most likely, this amount will be extended for several years; therefore, as long as your estate is not valued over this amount, it is not subject to federal estate tax.
Some states, however, impose their own separate state-based estate tax. But, most states are slowly phasing this out.
State Inheritance Tax
Depending on where you live, you could encounter a state inheritance tax too. If assets are passed to a charity or a spouse, they are exempt from the state inheritance tax. But, children and other individuals will have to pay inheritance taxes if they live within the six states currently using this law. If you reside in Texas, but your family members reside in a state that imposes inheritance tax, you will want to speak with your attorney about any issues this may cause for their own state tax return.
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