Estate law is comprised of complex rules and regulations that aim to regulate the legalities of planning for the continuity of your estate in addition to inheritance considerations. It’s important for citizens of all income levels to develop a quality estate plan, as this process helps to account for any financial needs both now and in the future while also preparing for any setbacks or unexpected changes. If you and your family own a considerable estate, we recommend reaching out to local estate planning attorneys for professional assistance. For years, JDKatz has proudly serviced as your trusted estate lawyers in Maryland, delivering the best services for clients in need to create optimal outcomes. From minor tax advice to high-value estate planning, we help in situations of all sizes.
If you’re in possession of a considerable wealth or a wide range of high-value assets, it’s important to put a plan together to create the best approach for managing your estate to receive the most benefits. Today, we’ll look at why you should have an estate plan, as well as the possible ramifications of not planning ahead.
Benefitting from an Estate Plan
Navigating the complexities of planning for your retirement and beyond while accounting for many factors can be challenging, but it’s important to remember that this process is done to establish four main goals:
- Determine the size of the estate. If you are unsure as to your total estate, it can be hard to accurately plan for how to best optimize your assets.
- Enforce testamentary objectives. Commonly known as your last will and testament, these wishes designate your estate’s beneficiaries and heirs.
- Appoint an Executor. One or more individuals will be tasked with overseeing the execution of your final wishes, as well as taking care of any remaining obligations.
- Reduce tax liabilities. For larger estates, taxes prove very detrimental. You can work with estate planning experts to tactically reduce your estate or gift taxes in beneficial and legitimate ways.
The Size of Your Estate
There are many factors included in your estate, making it necessary to fully account for all of your assets. It is important to utilize a document such as a personal financial statement, which officially documents all of your legitimate assets for financial institutions, probate courts, and more. Be sure to be comprehensive in your approach, as unaccounted for assets can result in major complications later on. Additional documents will often be required for long-term peace of mind as you plan for your estate in its totality.
Before any adjustments or deductions are made, all valuations are combined to be known as your “gross estate.” This figure is tallied to represent the fair market value of all of your property. It can be hard to determine what is a part of your estate and what is not, but this list explains the basics:
- Physical property. Any items you own can be considered property, including cars, clothes, tools, electronics, artwork, and so on.
- Real property. Any real estate that is in your name falls under this category. Your primary residence, rental properties, and open land will be assessed as part of your estate.
- Intangible property. Any assets that come in the form of finances will be added to your estate’s worth. Bank accounts, retirement plans, insurance policies, stocks, royalties, and other forms of value that are not physical will be included.
These assets will all be assessed a fair market value at the time of your death. The estate tax increased from $650,000 in 2001 up to $549,000,000 in 2017. What this means is that many estates will not quality for estate taxes, but those that do may be taxed upwards as much as 40 percent. Wealthy families who do not plan ahead may face serious problems in the future. It is essential to work with estate experts to optimize your outcome for your future and beyond.
Reducing Tax Liabilities
Planning ahead can provide major benefits, including reducing your tax owings to allow for the best results for your family. Instead of paying millions in taxes, your estate can instead transfer those assets to loved ones. There are many ways to reduce your estate wealth and thus diminish your tax obligation. A few popular wealth transfer techniques include:
- Creating LLCs
- Spousal funds
- Limited partnerships
- Irrevocable trusts
- Charitable donations
- Gifts to family members
- Education and healthcare payments for others
Next time, we’ll go into more detail on family LLCs that can help large estates to reduce their obligations and produce more opportunities to provide more for their beneficiaries, charities, and so on. If you’re in need of quality estate planning in Bethesda, our legal team is here and ready to help. JDKatz will work with you to create a personalized plan that meets your goals while optimizing your estate’s outcome for the future. Contact us today to learn more about our estate planning services!