Some estate plans are quite simple. Older adults may have limited assets and might want to leave their property to only one or two people. Other times, people may have inherited wealth from their loved ones or achieved professional success. They may have substantially more resources than the average individual.
Those with more valuable estates often have to engage in more thorough estate planning. They have more reason to worry about their loved ones fighting over their property, creditors making claims against their estate and taxes diminishing what their beneficiaries inherit. Estates often have to cover the income taxes an individual owed at the time of their death. There can also sometimes be estate tax obligations to fulfill.
Do testators in Nevada need to plan to cover estate taxes with their resources and/or minimize estate taxes after they die?
Large estates may be vulnerable to sizable taxes
Estate taxes are not universal. Instead, they only apply to the largest estates that pass through the Nevada probate courts. Like many other states, Nevada does not collect a state-level estate tax. Still, anyone residing in Nevada could be vulnerable to federal estate tax rules.
Federal estate taxes on their own can consume quite a bit of an individual’s property after they die. The federal estate tax rate varies from 18 to 40% depending on the circumstances. Up to two-fifths of someone’s property may go directly to Uncle Sam instead of to their beneficiaries if they don’t plan ahead.
An estate has to be worth millions of dollars for federal estate taxes to apply. In 2024, the threshold for federal estate taxes is $13.61 million. Individuals who own real property, sizable investments and business resources might have estates that are over that exemption threshold. The tax rate is progressive, so the more the estate exceeds the threshold, the higher the tax rate that applies.
Those putting together estate plans in Nevada can take steps to change the ownership of certain assets and reduce the overall value of the assets held directly in their names. Doing so can limit how much their estates are worth. A combination of different strategies can help people reduce or potentially even eliminate estate tax obligations.
Discussing personal resources and legacy wishes with a skilled legal team can help people determine if their estate plan needs to include estate tax strategies. Those who make the right moves early can enjoy their lives more confident in the knowledge that as much of their property as possible should pass to their beneficiaries rather than to the government.