No matter how big or small of an estate you own, it is important to engage in the process of estate planning. However, once the value of a single estate reaches a value of in excess of $1,000,000, then the process becomes very complex depending on what state the property is located in.
Whereas in the vast majority of states, having a property with a value of greater than $5,490,00 is a low enough price to make an estate exempt from taxes, in some other states in America, having a property with a value of anywhere from $1,000,000 to $2,000,000 is enough to be subject to inheritance tax.
By using an estate planning attorney to produce a complete estate plan on your behalf, it will help to fully maximize what the heirs to your property or properties receive once you have passed away.
Trusts Vs. Wills
According to the experts at Chaves Perlowitz Luftig LLP, the great majority of individuals begin their estate plan by writing a will. This is typically because wills are both cheap and easy to put together. However, where more complicated estates are involved, i.e. any that are greater than $1,000,000 in value, it may not necessarily be the best case to have a will.
Because a will is a public record, it means that any individual is able to find the exact price of your property or properties and who they have been left to once you have passed away. A person who is considered a VIP, such as a movie star or sports athlete, may not want it to be public knowledge who they plan to leave their estate to.
A more private solution to this is by setting up a living trust. This allows for the easy transferring of assets into the trust, which are then all managed by a trustee, e.g. yourself. Whilst ever you are alive, you are able to then modify the trust to however you see fit. Once you do die, the trust specifies how your assets are distributed out amongst your beneficiaries. Alternatively, a new trustee can be appointed in order to control and manage all aspects of it until being given to your heirs.
Giving Whilst Still Alive
In addition to sharing out your assets amongst your heirs once passed away, you can also do that whilst you are still alive also. However, the exact rules vary from state to state throughout the country and so it is important to become familiar with the regulations in the part of America where you are based. As part of the gift tax exclusion, individuals are able to give up to $14,000 each year to anyone they choose, including grandchildren or children, without the sum being subject to any form of taxation. This is useful for where your estate is no longer exempt from either or both state and federal taxes. But there are actually some circumstances where this $14,000 amount can be exceeded.