When we ask many of the Woodland Hills clients who come to us here at The Law Offices of Alice A. Salvo what the primary purpose of estate planning is, a common response may be to avoid losing any of estate’s value. For most, that means simply avoiding probate. Yet if that is your only objective, you should know that there are other methods through which external parties may cut into the value of your estate. One of the more common ways that this happens is through the estate tax. However, there are ways for you to avoid this tax, as well.
The Internal Revenue Service allows for a one-time estate and gift tax exemption. Per Forbes Magazine, that amount for 2017 will be $5.49 million for individuals and $10.98 million for married couples. If you and/or your spouse leave less than those amounts to your beneficiaries, they will avoid having those assets taxed.
Another way to potentially avoid estate taxes is through the marital deduction. This allows you to lower the taxable value of your estate by deducting the total value of assets left to your spouse from its overall value. Even if the overall value of the estate is over the tax threshold, it may avoid being taxed if the taxable amount is under that amount after applying the deduction.
You should remember, however, that leaving your entire estate to your spouse could cause him or her to have to eventually pay the estate tax if that pushes his or her estate’s value past the tax threshold. That’s because the value of your own tax exemption is not transferrable.
You can learn more about avoiding estate taxes through proper planning by continuing to explore our site.