There is an ongoing debate in Washington D.C. about the estate tax and how it will be handled. Texans who have a substantial enough portfolio where it will be affected by the estate tax if it stays in place or if it is repealed should keep track of the proposals and potential changes that might be made as it will be important to their estate planning and how it affects their heirs. In general, people who are considered wealthy are affected by the estate tax. However, the argument to repealing it is to make certain that those who have hefty assets will have a chance to maintain their wealth.
When a person dies, their assets will be calculated to determine if they are subject to the estate tax. Currently, the amount for couples is $11 million and for individuals, it is $5.5 million. Should the estate tax remain in place, it is set to rise in 2018. Any amount that is inherited when a person dies will be free from the estate tax up until it reaches these amounts. After that, it will be taxed at 40 percent. Those who are in danger of being subjected to this tax at the time of death should take steps to shield their heirs from having to pay it.
Tactics that many use to avoid the estate tax include giving gifts to heirs over time, donating to charity to lower the value of the estate, or placing their assets into various trusts that do not assess as much in taxes. Currently, it is possible to pass an estate onto a spouse without there being a tax penalty. Those who are against the estate tax believe it is tacitly unfair to those who built a fortune and will suddenly see it significantly depleted just because they died and did not use various shelters to protect it. Others believe that the estate tax is necessary for revenue and because a vast portion of those who would benefit from its repeal have simply inherited their wealth.
Regardless of personal feelings about tax responsibility and legal issues related to it, there are estate complexities that will come to the forefront for any person who has a substantial estate. Having legal assistance with estate administration can be a guide to dealing with the estate tax and any other matter related to wills, trusts and other devices to protect assets after death.
Source: abcnews.go.com, "Death and taxes -- all about the estate tax debate," Sarah Skidmore Sell, Nov. 27, 2017