Reduce Taxes Through Your Estate Plan
Estate planning is so important for so many reasons. It lets your voice be heard after you die or should you become incapacitated. It allows your minor children to be cared for by guardians that you have selected and passes your assets on to people and organizations you wish. It helps to make medical, legal, and financial decisions should you become incapacitated. Your estate plan can also help avoid taxes.
Federal estate taxes only affect a small portion of the population. They impact the very wealthy as the individual estate tax exemption is currently $11.7 million. State estate and inheritance taxes affect many more people.
Twelve states and the District of Columbia have an estate tax, and six states have an inheritance tax. Their thresholds are much lower than that of the federal estate tax. The Massachusetts estate tax exemption is $1 million – a small fraction of the federal exemption. In 2026, the individual federal tax exemption is scheduled to be sharply reduced from $11.7 million to $5.49 million. This will impact many more people, particularly those whose assets include businesses, large life insurance policies, or significant property.
The deceased person's estate is the basis for estate taxes and pays the taxes. As the name implies, inheritance taxes are assessed on and paid by the deceased's heirs and beneficiaries. The estate can sometimes pay inheritance taxes for the heirs and beneficiaries.
Well designed estate plans can preserve your estate for your heirs and avoid losing a lot to taxes. As part of your estate plan, you can establish joint accounts, set up trusts, or make irrevocable gifts. These actions taken as part of your estate plan take assets out of your estate, thereby lowering your tax basis.
Estate planning is for everyone. Make sure your estate plan reflects your wishes and protects your assets. Review your plan every three years or after major life events such as marriage, divorce, or births and deaths in the family. Keep current on changes in tax laws and other financial legislation. Work with Shoffner & Associates, experienced estate planning attorneys, to update or create your plan to ensure it is current and tailored to your specific financial and family needs.
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Freya Allen Shoffner, Esq.
Shoffner & Associates
Counselors to Small Business and Families.
Give Freya a call at (617) 369-0111 TEXT US (857) 524-3422 or email email@example.com