When the Republican-backed tax reform plan was under consideration late last year, it included provisions that affected estate planning. Whether or not you support the changes, the passage of the Tax Cuts and Jobs Act of 2017 provides everyone with a reminder that planning for the future is something to do sooner rather than later.
The “Death Tax”
The federal estate tax is a levy of 40 percent that, prior to 2018, was applied to the value of estates exceeding $5.6 million for an individual and $11.2 million for married couples. The tax reform bill doubles the tax exemption which can be claimed by an estate, allowing a person’s heirs to realize savings on the so-called “death tax.” Proper planning can help minimize the impact the federal estate tax has on your family’s inheritance.
Why Is an Estate Plan Necessary?
If a person dies without a properly filed and notarized will, the decision of who receives their assets and property will be left to the state. The current laws of the state where they resided will determine who is a family member and who is entitled to a portion of the inheritance.
Surveys have shown that more than 50 percent of Americans between the ages of 55 and 64 do not have a will. If you die without a will, your property will go into probate, and this could result in a huge tax bill for your family, greatly reducing the amount of inheritance to be passed to surviving family members.
Other reasons to create an estate plan include:
- When assets are in probate, family members cannot access those funds to help pay funeral and burial costs. Pre-paying those expenses can save surviving members from bearing those costs.
- Sound estate planning can also ensure that you have the funds necessary to cover medical expenses required later in your life.
- In the event you wish to divide your wealth among charities and other organizations, those wishes cannot be contested if included in your will.
Plan for the Future with a Knowledgeable California Trust and Estate Attorney
While no one really likes to think about death, proper estate planning can help a person minimize stress and confusion when all they really want to do is enjoy the peace of their remaining days. To ensure the wealth you worked so hard to build is passed to your heirs according to your wishes, SAC Attorneys LLP can walk you through the legal and financial regulations to prepare a fair and solid estate plan. Call an experienced San Jose estate planning attorney at 408-436-0789 today to schedule a free consultation and begin preparing for the future.