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Since 2011, Americans have been planning their estates in accordance with the Economic Growth and Tax Relief Reconciliation Act of 2011, otherwise referred to as, "The Act." The Act succeeded at changing 441 tax laws, making it the first cut in over 25 years since the 1996 Act. The new Act also marks the biggest estate tax reduction in 20 years. Even states without taxes, such as Wyoming, face dramatic changes to their landscape.While the short-term outlook indicates that the estate tax is not slated to go away permanently, there already are, and will be some additional, estate tax relief plans brought forth with this Act over the next decade. There are estate planning techniques which can help you reduce this burden.
A more dramatic step is to move your tax domicile to a state with no inheritance taxes. For example, Wyoming does not tax estates. Compare this to New York or California which each take a piece of your hard earned life’s savings.
The Act works in favor of individuals planning their estates and their survivors. It lowers the tax rate on a multitude of estate taxes, including:
1) the marginal estate tax
2) the generation-skipping transfer tax (GST)
3) the gift tax. The gift tax alone has seen a major change since 2002. Through 2009, individuals received a steady increase in the amount of gift taxes they were allowed to give from $1 million to $3.5 million.
The Act also increases the amount of assets that can be transferred at death and eliminates generation skipping and estate taxes on a portion of assets from years 2012-2019. As of December 31, 2009, the generation skipping tax was repealed permanently so that grandparents can gift portions of their assets directly to their grandchildren and great grandchildren without having to lose a portion of the assets to taxes.
Solely for the year 2010, the estate tax will was entirely repealed for the duration of one year. If you had the foresight to die in the year 2010, you were allowed to give your entire estate to your heirs without having to worry about losing a portion of it to taxes. However, if your benefactor passed from 2011 onwards, only $1 million was/is available to be passed on to your heirs without taxes.
Even though the estate tax is not slated to be permanently repealed within the foreseeable future, it is important that you plan your estate so that your will can be carried out accordingly once you have passed on or become incapacitated.
Understanding the complicated tax system can be a challenge for someone not versed in tax law. For those individuals planning their estates, we recommend enrolling in an estate-planning course or meeting with an attorney who can walk you through the steps needed to ensure your heirs receive as much of your assets that you desire.
There are a few options for reducing your overall estate tax bill. The most common is gifting away assets during your life. The second option is to set up a trust. A land trust is a great way to give back to the community, while reaping the benefits of a charitable deduction. Those looking to provide assets for family members in need should explore Special Needs Trusts in WY. These are set up to provide for individuals needing permanent medical assistance, and are designed to avoid disqualifying them from government assistance programs.
Contact Info:
Name: Bradley Davies
Email: Send Email
Organization: Wyoming’s Estate Planners, P.C.
Address: 203 S. Main St, Sheridan, WY 82801
Phone: 307-683-0870
Website: https://wyomingestateplanners.com/
Release ID: 202962