Estate Taxes

One of the most significant factors that you should consider when designing an estate plan is taxes. The act of giving away your property may be subject to taxes on the federal or state level, or both. These tax liabilities could be the largest expenses your estate may have to pay. This means the property that you want to go to your loved ones may go to the government instead. Understanding what these taxes are, how they work, how they may affect your estate, and how they can be minimized is vital to implementing a successful estate plan.

While estate taxes technically refer to taxes that are imposed at death, there are two types of taxes that may affect how you plan your estate, transfer taxes and certain income taxes.

Transfer taxes are imposed when you give your property to someone else. If this is done while you are alive, it is called a gift. At death, this kind of transfer is called a bequest or legacy, if you leave a valid will or an in testate succession if you don't.

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