Inheriting appreciated assets from your deceased spouse can bring a host of financial complications at the time of life when you already have too much on your mind. Here’s the math to know how to be prepared – and maybe save on taxes.
The murkiest part of estate planning is to discuss when and how to distribute your assets to your heirs. This process requires a series of considerations and trade-offs to avoid emotion-laden family problems.
Up to now in our series of articles we focused on numbers, which are objective and straightforward. But when it comes to this final set of issues, things get gray because emotional factors drive decisions now. There is no correct answer on how to distribute your estate.
The American Taxpayer Relief Act (ATRA) lets you leave millions to heirs tax-free. Our first two articles examined ATRA and various trusts. Here are some of the remaining tools you can use to bequeath assets and avoid a big estate tax bite.
You still need powers of attorney. Essential tools for managing disability, these are inexpensive and simple to set up.
You can stop worrying about federal estate tax thanks to Congress passing the American Taxpayer Relief Act (ATRA) last year. Here’s what you still better think about, though, before bequeathing your estate.
One of the advantages of life insurance payouts is that they are that tax-free, right? Well, that’s often true, yet not always. It pays to know when the taxman can take a bite of your benefit.
Your tax liability for life insurance policy payouts varies widely based on your situation. Let’s look into the basic rules and a few specific cases.
What states tax retirees the least? That’s something to ponder as you plan where to retire to. It’s not the predominant factor, but an important consideration.
Kiplinger’s put together an interactive map that shows tax friendliness for retirees. The magazine has links to states with no sales tax, or low sales taxes, no income tax and more.
The jockeying has begun in Washington among President Barack Obama, the Republican-controlled House and the Democratic-led Senate on taxes. How this plays out will affect us all. What should we look for?
Your tax rates may increase drastically on Jan. 1, 2013, as the Bush tax cuts expire. You can take steps now to minimize the bigger tax bite.
This advice assumes that Congress does not act to extend the Bush cuts. The three areas that will affect Americans the most will be on income, investments and estates.
Ordinary Income Tax
If you are thinking of making a substantial gift, you can save a lot of money in taxes if you act soon. The limits on what you can give tax-free may expire in January.
“It’s no secret the recipient isn’t the only one benefiting from a monetary gift,” notes Amy Jo Lauber, president of Lauber Financial Planning in Buffalo, N.Y. “True, you feel good doing something nice for someone else.” But, she adds, giving money may also reduce your gross taxable estate or transfer income-producing assets to a beneficiary in a lower tax bracket.