Probate is necessary when an individual dies without the proper estate planning documents and his/her assets exceed $150,000. The cost for probating an estate is based on the estate’s gross asset value, which generally means including all that you own, but nothing that you owe. See the chart below for an example of probate fees:
By setting up a properly drafted will and trust you can avoid probate, prevent estate taxes, and even gain tax benefits.
One way to lower estate taxes is through gifting. When assets are transferred as ‘gifts’, these gifts are not considered inheritance and therefore do not face taxes. Also, the removal of these gifts from your estate lowers your estate’s taxable value, ultimately reducing the amount of tax you may have to pay. Assets can be gifted directly to beneficiaries, into a trust, or even into closely held business entities. You should consult a professional for the best option for you.
Donating assets to charity is another way to reduce estate taxes and gain tax benefits. If you are thinking of donating to charity to reduce your estate taxes, you may want to consider a charitable remainder trust. To find out if this is right for you, contact your attorney today. As everyone’s situation is different, a professional should be consulted on which estate planning tactics suit your situation best.