As your wealth grows, the idea of passing on your wealth to your heirs comes into play. 

Every taxpayer has a $11.7 million federal estate tax exemption for 2021. Meaning you can leave up to that amount to your family without any taxes due. Married couples can take advantage of a $23.4 million estate and gift tax exclusion. If you pass away, your spouse is entitled to the full value of your estate, with no cap. However, the exemption of $11.7 million is set to expire in 2025 and will revert to the exemption of $5.49 million (with an index for inflation).  

If your estate is worth more than $5 million, there needs to be a plan in place for when you pass away.  

The easy answers you will hear from most people is the gift tax exclusion. The annual gift tax exclusion is where you can give up to $15,000 (for 2021) per individual, to as many people as you want, with no tax consequence. You may also be aware of paying college tuition and medicals bills directly to the institution, in which case no limits apply. Gifting and paying for college tuition are great strategies but are of minimal help if you have an estate worth several million dollars.  

The estate tax rate can be as high as 40%. We help to take a deeper look into your estate and plan for the inevitable. There are many different strategies, such as taking advantage of section 1014 step-up basis for appreciated property, selling off assets for a loss during one’s lifetime, and use of trusts to help mitigate a huge tax burden when filing an estate tax return. There are various types of trusts, and each strategy is catered to a specific set of circumstances.  

We specialize in structuring Irrevocable Life Insurance Trusts (ILIT) to ensure you have enough life insurance that stays outside of your estate to cover any potential estate tax liabilities upon passing away.