As Nevada readers are well aware, estate planning can be a rather complicated process. Further complicating this process are new tax laws that have been changed, updated and reworded multiple times since 2001. After many of these changes were finalized in 2013, estate planning may now be more fluid and easier for those wishing to prepare for the future.
One of the main concerns for those exploring all estate planning options is the estate tax. There are many misconceptions about how much an estate will be taxed before it is distributed to the beneficiaries. Federal estate tax laws allow an exemption of over five million dollars, which will increase according to inflation. However, it is important for Nevada residents to consider state taxes on inheritances, income, estates and other assets.
It is vital to consider all of the possible taxes that could be levied against an estate. To understand exactly what an individual may have to pay, one should factor in any applicable state taxes and taxes on any capital gains. If a large part of an estate consists of mutual funds and investments, it may be beneficial to have an individual evaluation of the estate to determine how all assets should be factored into the plan.
Understanding the new tax laws and how they apply to estate planning can be complex. In addition to the financial implications of this process, it is best to understand the legal aspects as well. By having a legally binding and carefully outlined estate plan, a family can rest assured that their financial and legal wishes will be met after they pass on.
Source: Investing Daily, “The New Focus of Estate Planning“, Bob Carlson, May 7 2014