As we have mentioned previously on our blog, the estate tax exemption is set to change at the end of this year. One recent report that may be of interest to readers in Texas highlights the fact that the exemption will change from $5.12 million to $1 million per individual if Congress does not act to stop the change. This may be why many people in our state are now considering a review of their estate planning documents.
The lower level for an exemption to the estate tax means that many more people in Texas will have estate that is subject to the estate tax. When a person adds up the value of real estate, insurance and other assets, it is not difficult to get to the $1 million mark for many. This could, if not estate planning occurs, lead the estate to be subject to a tax that could be as high as 55 percent in some cases.
However, that good news is that, with proper estate planning, at least some of the estate tax can be avoided. For example, certain people in Texas find that they can lower their estate tax by lowering the value of their estates. One of the ways to achieve this goal is by gifting a portion of the estate to people or organizations that would have been beneficiaries after the death of the individual creating an estate plan.
Estate planning allows a person in our state to ensure that their wishes for the distribution of their assets are complied with after their death. With the changes to the estate tax exemption, some find that they also wish to reduce the costs of taxes to their heirs after they die. Because estate planning tools can be customized to fit every situation, a person may find that planning can benefit both themselves and their heirs while alive and even after death.
Source: southwestfarmspress.com, "Estate planning best way to mitigate rising tax," Dec. 19, 2012