When people are doing their estate planning, one objective they may want to know more about is how to minimize tax obligations. Depending on where a person passes away, the value of his or her estate and the states in which he or she owns property, tax obligations can be something worth addressing.
This is particularly true for wealthy individuals, as they can be subject to tax laws because of the size of their estates. For instance, if your estate has prior taxable gifts and combined gross assets of $11.4 million, then it will be necessary to file a federal estate tax return. However, that amount could be changing dramatically in coming years.
The divisive political environment has given rise to multiple propositions on how to improve the economy. One particularly thorny issue politicians are targeting is the estate tax.
As this article notes, Sen. Bernie Sanders recently proposed dropping the limit for estates subject to estate tax from over $11 million to $3.5 million. These estates would be subject to a 45 percent tax. Estates worth more than $10 million would see a rate of 50 percent. And estates of more than $1 billion would see a 77 percent tax.
A very different proposition comes from leaders on the other side of the political aisle. Republication Sen. Mitch McConnell and others recently announced a plan to repeal the estate tax altogether.
Whether these or any other changes are actually made to the current federal estate tax remains to be seen.
Understanding your obligations
Tennessee is home to many successful entertainers, athletes, entrepreneurs and other high-profile individuals who could very well be affected by these and other proposed changes to estate tax laws. If you are among them, it can be wise to have legal guidance when it comes to making an estate plan.
With thoughtful direction and an understanding of state and federal tax laws, people can make informed decisions about their end-of-life plans.