ESTATE TAXES

Federal estate tax is a concern if you have a large estate, and if you are relying on an outdated trust or the incorrect estate plan, you could pay much more in taxes than you should. While right now the Estate tax Exemption hovers around 13 million dollars per person, this estate tax exemption will sunset on December 31, 2025, and drop to $5 million. Starting January 1, 2026, and once it is adjusted for inflation, the estate tax exemption will probably be between $6.5 and $7 million. Some planners even think the exemption could go lower in the future. 

If your total estate is presently between 6 and 10 million dollars or higher, especially if you also have life insurance, you should act now to revise your estate plan. Owners of high-value estates need to bring their attorney, their financial planner, and their CPA together to best determine how to employ one of the many well-established strategies that can reduce or eliminate death taxes. But you must start the planning process early in order to implement many of these plans. Most strategies include some form of an irrevocable trust, such as a Dynasty trusts, a Tennessee Investment Services Trust (or TIST), a Spousal Lifetime Asset Trust (or SLAT), or a Charitable Trusts. 

While many clients may not have the estate tax "problem" of a multi-million-dollar estate, other types of trusts, such as the new Tennessee Community Property Trust, can be used for estates with assets that have greatly appreciated since it was purchased, such as real estate, stocks, and other investments.  The Community Property Trust is available for married couples to avoid Capital Gains taxes and give the surviving spouse a zero basis for all types of appreciated assets, not just your home. 

Your taxable estate comprises the total value of your assets including your home, other real estate, business interests, your share of joint accounts, retirement accounts, and life insurance policies – minus liabilities and deductions such as funeral expenses paid out of the estate, debts owed by you at the time of death, bequests to charities, and value of the assets passed on to your U.S. citizen spouse. The taxes imposed on the taxable portion of the estate are then paid out of the estate itself before distribution to your beneficiaries.

There are many ways to use irrevocable trusts to avoid or reduce your family's exposure to Estate Taxes.  

Spellerberg Law will work with you so your estate pays the least amount of tax possible and protect you and your family's interests throughout your life and after your death.

Spellerberg Law assists its clients with Estate & Business Planning, Probate & Trust Administration, and Elder Law throughout California and Tennessee.