Minimize estate tax and maximize the assets you pass on
The decisions you make about your assets today will affect how they are taxed and distributed in the future to your beneficiaries.
You have worked hard and paid taxes all your life but nobody should be paying taxes on what you have spent your life building.
Unless you plan ahead, the value of your assets could be at risk with estate tax (sometimes also called inheritance tax or death tax).
We help you:
- Understand the applicable estate taxes
- Minimize the tax paid on your assets
- Understand why you need to plan for asset protection
Who has to pay the estate tax?
Estate tax is paid on the net value of all the assets you own at the time you pass away.
It amounts to 40 percent of the value of your estate and must be paid by your family or other beneficiaries within nine months of you passing away.
Currently, estate tax largely affects high net-worth individuals with an estate exceeding $11.4 million ($22.8 million for a married couple) but the regulations do change from year to year and from administration to administration.
Just because you are not affected by estate tax now doesn’t mean you won’t be in ten years’ time.
The following exemption changes were introduced in 2017:
- For individuals: estate tax exemption increased from $5.4 million to $11.2 million.
- For married couples: the estate tax exemption increased from $10.9 million to $22.4 million.
- Annual Adjustment: each year the estate tax exemption is adjusted for inflation so the exemption has increased from $11.2 million in 2017 to $11.4 million in 2019 ($22.8 million for a married couple).
Clearly, 40 percent amounts is a significant tax bill.
For those with a net worth that exceeds $11.4 million, it is beneficial to understand the steps needed to reduce your tax burden.
How to minimize estate tax
How do you reduce the tax burden of your family, if you are an individual with an estate currently valued at $11.4 million or over?
One of the most widely known ways to minimize estate tax is by gifting assets. We can advise on this.
However, there are other strategies that we advise on. Depending on your circumstances, we can consider the following:
- Setting up asset protection trusts
- Creating life insurance trusts
- Forming family limited partnerships or limited liability companies (LLCs)
- Using qualified personal residence trusts
- Selling assets to an irrevocable trust created for you by a third party
- Utilizing dynasty trusts
Start preserving your assets
As well as minimizing estate tax in the future, there is another concern for many individuals: preserving your assets now.
As an estate planning firm, we will ensure that both your asset preservation and estate tax planning concerns are accounted for.
It is important to take measures to protect your assets before a larger percentage is lost through unnecessary tax payments or long-term care.
A few simple asset preservation planning measures can make a big difference.
We will look at the following areas of your assets and advise on the steps you can take to protect them, based on your circumstances:
- The gross value of your estate
- Life insurance
- IRA and 401K accounts
- Jointly owned assets with a spouse
- The present situation with your will(s)
Together, we will consider the risks and how best to counter them, using strategies such as revocable trust setups. We also work with your financial adviser to explore asset preservation options such as wealth replacement strategies using life insurance and other vehicles.
Attending to this while you are alive and well could save your family from paying the price.
Contact Us Today
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When it was time to update our estate plan we turned to Kent Phelps. We were only two days away from an extended trip overseas and needed it done fast but done right – especially with a child who has special needs. Our documents were completed, signed, notarized and witnessed in a day! And we were confident it was done right because we had the help of an experienced attorney. So grateful to Kent for going above and beyond so we could enjoy our trip with peace of mind!
We had known for many years that we needed an estate plan but just never got around to doing it. Our son hired Kent Phelps to do his estate plan and encouraged us to contact Kent and get it done – so we did! We immediately felt like Kent “got” our unique family situation and knew just what to do. We wish we had done this sooner but what a great feeling it is to know that what we’ve worked so hard for all these years will be protected and go to the right people when it’s our time. We highly recommend Kent to anybody who needs an estate planning attorney.
Amazing In Every Way! Kent was amazing. He excelled in communication, and he was very understanding and listened to our unique situation. He explained everything in detail and was an amazing advocate for what we wanted to do. I would highly recommend him and his services.
We were looking for an estate planning attorney and were referred to Kent Phelps by a friend. We felt like he really listened to us as we talked about our family and business and what we wanted to accomplish. Kent took the time to help us understand how living trusts and LLC’s work and how they can help protect our family and property. The fixed fee approach was also very appealing to us. We were excited when we received our estate planning and LLC notebooks! Being able to have instructions in our trust that make sure our children receive what we leave them in a way that will truly help, rather than harm them has given us the peace of mind we were hoping for. So grateful we found Kent!
Mr. Phelps has provided exceptional work and advice. I have recommended many family and friends to Mr. Phelps because of his professionalism.
Kent’s unique perspective and focused expertise set him apart from his peers. His willingness to completely understand his client’s goals, and only then offer appropriate suggestions is refreshing. With an ability to take complex asset protection strategy and explain it in common context, it is easy to recommend him.
Mr. Phelps’s services have been used to handle some amendments to business documents following my divorce. The amendments were thorough and filed in a timely manner. While this was a simple transaction, I fully expect the same level of effort on complex transactions. I highly recommend Mr. Phelps for legal needs.
Kent has ideas and solutions that were very valuable to us. I have recommended Kent and his firm to many of my associates.
Kent is an exemplary advocate for his clients. It is an honor to have worked with him and witness his high ethical standards.