When people begin to plan their estate in Minnesota, they may be under the impression that transferring financial assets is rather seamless if they plan far enough in advance. However, what they should remember is that tax laws may affect this transfer in terms of what their heirs are required to pay in order to own something for which they were named in the estate. When people take thoughtful consideration while allotting assets, they may be better able to prevent outrageous tax requirements from hindering their heirs’ ability to acquire what is rightfully theirs.
In December 2017, the Tax Cuts and Jobs Act was passed, which could ultimately affect the process of planning an estate. For individuals who have high net worth, they may benefit from using methods like charitable giving, selling instead of giving, shifting income or even delaying capital gains taxation in an attempt to reduce their income taxes. Using such methods may also reduce the amount of tax their heirs will be required to pay on acquired assets following their loved one’s death. Despite changes in the law, generation-skipping transfer, estate and gift taxes are still at a flat 40 percent rate.
While portability remains relatively unchanged and an appealing option for many married couples, it may not be an effective or beneficial decision for families who are blended, have high appreciation potential or are experiencing significant problems with creditors.
When families decide to begin coordinating an estate plan, they may benefit from the assistance of an attorney. A legal professional has the experience and knowledge to help create a plan that is legally binding and advantageous to everyone involved.
Source: Accounting Today, “The down and dirty on the new tax rules and estate planning,” Steffi Gascon Hafen, Feb. 8, 2018