Estate Planning Mistakes That Increase Your Taxes
Effective estate planning is crucial if you want to preserve your wealth for your children. Beware of making these traditional estate planning mistakes if you want to bypass paying unnecessary extra estate taxes (death taxes) to the IRS and state taxing authorities thus reducing your children's inheritance. You will be pleased to know that these costly mistakes are easily avoided with proper planning.
Many states have their own estate tax (death tax) and the overwhelming majority of those have "decoupled" their estate tax from the Federal estate tax, which means that your estate could be directed to state estate tax even if no Federal estate tax is due. You can also contact Arcadia Estate Planning Law Firm to know more about the estate laws.
Since the Federal estate tax exemption currently is $5.12 million and the state thresholds for states that force their own estate tax all are under this amount (most commonly, at $1 million), without proper planning, this discrepancy could result in an unpleasant surprise for your heirs upon your death. You require reviewing your current financial situation to determine the possible exposure to state estate tax and learn how to minimise it.
The amount which funds a typical credit shelter trust varies according to your financial and family circumstances. For death tax purposes, the credit shelter trust should be funded with up to the state exemption amount (typically, $1 million). The credit shelter trust may be funded with an additional amount up to the Federal death tax exemption ($5.12 million for the year 2012), depending on the client's Federal death tax exposure.