You want to pass on as much wealth and assets to your heirs as possible. In fact, maximizing the value of your estate is a primary reason to seek out a Murfreesboro estate lawyer. One hurdle to passing on a large estate is the estate tax levied by the federal government.
Currently, the federal estate tax limit is set at $5.6 million; any amount over this limit is taxed at an amount between 35% and 40%. These tax obligations can gobble up a portion of your wealth, there are ways to reduce and limit their impact. A Murfreesboro estate lawyer can help with this process. Keep reading to learn three ways an estate lawyer effectively reduces the estate tax you need to pay.
#1: Build Your Estate Plan as a Couple
The federal government sets both an individual and partnership limit on the estate tax. Married couples are permitted to leave $1,180,000 in a combined estate, as of 2018. This means that by building your estate plan with a Murfreesboro estate lawyer as a couple can allow you to leave double the amount of assets, without losing the exceptional cost of the estate tax. Estate lawyers will often refer to this benefit of marriage as portability or say, “the estate tax is portable.”
How does this help reduce your estate tax obligations? If a woman is CEO of a company and has $9 million in her estate, while her partner only has $500,000, she will be taxed on $4.4 million of her estate. However, if married the couple can leave this entire amount to heirs without any estate tax obligations.
In the past, a couple would need to arrange a specific type of trust to receive the benefits of the estate tax break, but today you merely need the right estate planning by a Murfreesboro estate lawyer.
#2: Give Generous Gifts to Your Heirs
You are only required to pay the federal gift tax if the value of your gift exceeds a certain amount. The arrangement is very similar to the federal estate tax. Therefore, a Murfreesboro estate lawyer can help you arrange generous gifts to children, charities, and other loved ones during your lifetime that will be lower than the gift tax and simultaneously lower your estate tax obligations. How does this work?
An individual or couple can give up to $15,000 without incurring the federal gift tax. But not only can you gift $15,000 to one person, you can gift this amount to as many people as you want. For example, an individual can gift $15,000 to four different family members without paying the gift tax or a married couple can gift $15,000 to their three children without incurring the tax.
These gifts could be in cash or currency, but that isn’t a requirement. You can gift a piece of property, car, or other assets. As well, this limit only applies on an annual basis. So, you can make repeated gifts on an annual basis without paying the tax. A Murfreesboro estate lawyer can help determine the appropriate way to structure these gifts and when this is an appropriate way to structure your wealth.
#3: Create a Family Limited Liability Company or Family Office
When a married couple has enough wealth that the estate could survive for generations, they often turn to a Murfreesboro estate lawyer to create a family limited liability company, otherwise known as a family office. This is an estate-planning tool where the couple, sometimes in conjunction with other members of their family, create a limited liability company. That limited liability company is funded exclusively by the family’s wealth.
There are specific rules for the use and investment of this wealth, and it can only be used as a wealth management advisory firm. However, even with these restrictions in place, you can continue to build your wealth through strategic investments. Some family offices in the United States have operated over generations and are staffed and employed similar to any other company.
Speak with a Murfreesboro Estate Lawyer
Are you ready to speak with a Murfreesboro estate lawyer about maximizing your wealth? If you are a high-wealth individual or couple, then you should be. Our Murfreesboro office at Surber, Asher, Surber & Moushon, PLLC can help. Contact us at (615) 997-1908.