The Danger of Federal Estate Taxes
June 15, 2014
No one enjoys taxes. While in many cases they are a necessity, it is always a hassle dealing with them, and it is always frustrating to see such a large portion of income simply vanish. For some people, April 15 is the most hated day of the year.
When it comes to estate plans, taxes are even worse. As a general rule, federal estate tax is a tax on already-taxed income, it can be as high as 40%, it is due 9 months after an individual passes away, and the laws surrounding it are enormously complex.
It is entirely possible that in an improperly-prepared estate plan, the federal estate tax could wipe out a private business. That is why it is absolutely crucial to have an experienced estate planning attorney on your side, as the tax costs can often be completely mitigated.
For the most part, federal estate tax is only a problem for either businesses, or extremely wealthy individuals. 2014 tax laws state that federal estate taxes only come into play once an estate crosses a value of $5,340,000. This value goes up with inflation, and married couples are exempt until their estate crosses double that amount.
When estate taxes do come into play, though, the results can be catastrophic for those not prepared for them. It is true that there are far more pressing matters to attend to for 99% of individuals, but if you do not have an attorney go over the possibility for federal estate taxes, it can literally cost your loved ones millions.