BEWARE: you may not be out of the woods yet. Unless you have a comprehensive estate plan, taxes may slip in when you’re least expecting it.
That being said, many, but not all, of you can rest assured that the federal estate tax won’t diminish your estate. The exemption is so high that it just doesn’t affect 99% of the population. You’d have to have more than $5,450,000 in your estate before federal estate taxes hit. And, if you’re married, that number, with proper action, can be doubled.
However, many states also have estate taxes which spring into effect at much lower thresholds. For example, state estate tax may be charged to your estate with just $1,000,000; and, while $1,000,000 sounds like a lot of money, you may very well be over that threshold and not be aware of it. Consider your real estate, retirement accounts, investment accounts, annuities, collections, and insurance – and – add in any property you control through a power of appointment.
And, then, there’s state inheritance tax…
While estate planning is not just about the money and not just about the taxes, tax planning is an important element and must contemplate estate and inheritance taxes as well as income tax planning opportunities – for you and for your heirs – and capital gains, generation skipping transfer, and other tax systems.