Probate and taxes: How estate lawyers can minimize liability

In a recent report it was estimated that more than 60% of Americans didn’t have a solid estate plan in place. Being home to seasoned probate estate lawyers, we at The Law Offices of Sean Patrick Cox feel it is our duty to highlight how imperative a strong estate plan is to ensure your beneficiaries aren’t being subjected to higher taxes on their inheritance.

Most people aren’t even aware of all the taxes that their estate may have to pay. Without competent planning, the tax liabilities attached to your estate might become unbearable for beneficiaries. The hurdles and exorbitant costs associated with probate can easily be avoided by drawing a comprehensive and easily authenticated estate plan with the help of an experienced probate and estate lawyer.

In fact, a good probate estate lawyer can take the stress out of the entire legal procedure that entails estate planning. They can:

• Search, list, and secure a decedent’s assets.
• Prepare and file documents requested by the probate court
• Determine the validity of a deceased individual’s debt and recommend the best options to clear them off.
• Unearth life insurance policies and collect the payout
• Make sure assets are distributed to the rightful heirs

Simply put, a good estate lawyer will help you address the challenges associated with the probate process, considerably minimize tax liability, and make sure that you and your heirs are successful in inheriting most of your wealth.

Understanding Probate Taxes
It is imperative to note that you may have to pay taxes on the money or property you inherit from a deceased family member or loved one. Following are a few of the different types of taxes that your beneficiary has to pay without proper estate planning.

1.Estate Taxes
Also known as the death tax, Estate Tax is the tax paid on the assets left behind by the deceased person. This tax can be in the ballpark of 18% to 40% and is usually based on the asset’s current market value.

2.State Taxes
Many states in the USA impose their own version of inheritance tax. These taxes are to be paid by your beneficiaries once they have fully inherited the assets. It is recommended to hire an estate planning attorney that knows about the taxation laws specific to the state your estate is in.

3.Gift Taxes
Sometimes, a person may choose to gift some of their assets before death. These gifted assets might be subject to tax by the federal government. For a gift to be eligible for taxation, its value will need to exceed the annual limit of $16000.

These taxes can end up overwhelming anyone. However, you can easily avoid almost all of these tax liabilities with proper planning and strategies.

Planning Ahead
Estate planning at its core is about protecting your loved ones from future financial troubles. This means protecting your family’s wealth from the IRS as well. Estate lawyers can craft a plan that seamlessly transfers assets to your heirs while making sure they are facing the smallest possible tax burden.

Proper planning can help your heirs avoid some or even all of the state and federal taxes they would have otherwise been eligible to pay. Over the years, many strategies have emerged that do a phenomenal job of reducing tax liabilities on an estate.

Taxes can be avoided by adopting strategies like

• Making charitable donations
• Setting a marital trust
• Setting up an irrevocable life insurance trust
• Establishing a Family Limited Partnership
• Setting up a qualified personal residence trust

A seasoned estate lawyer will provide you with profound insight into each of these strategies. Based on your specific circumstances, they can leverage a strategy that is best capable of minimizing the tax liability on your estate.

Identifying and Valuing Assets
Identifying and then determining the value of all assets in the decedent’s estate is integral to competent tax planning. This is something that a probate process demands and can play an instrumental role in helping you determine whether an estate owes any state or federal taxes. Doing this will help beneficiaries get an idea of what their inheritance is worth and how much taxes they can expect to pay on it.

The real challenge of asset valuation is determining the value of all the different assets that constitute the estate. For instance, you’ll need to get in touch with a real estate agent to accurately estimate the value of a property. Similarly, you’ll have to consult a professional appraiser to estimate the value of both tangible and intangible assets of a business left behind.

The entire process of identifying and valuing assets can be time-consuming and tedious if there are multiple different types of assets involved. Thankfully, you won’t have to worry about this with a good probate estate lawyer by your side.

Handling Disputes and Challenges

One of the biggest challenges associated with the estate division can pertain to disputes that can arise between family members. These disputes can turn ugly and destroy relationships. An estate lawyer can avert these issues by creating a will that clearly dictates the divisions of an estate. They’ll make sure the will is crafted with appropriate validation and witnesses.

They can help you set up a trust that serves as another layer of security against probate and taxes. The probate estate lawyers can also serve as a mediator to make sure probate disputes can be settled amicably without causing any further damage.

Conclusion
Probate and taxes can severely hinder your ability to protect your family in the event of your death. This is why most people today immediately opt for the services of estate lawyers to reduce the tax burden on their heirs and protect the value of their accumulated wealth. They can counsel you on the different types of probate taxes that your estate may be susceptible to and also explain how your heirs avoid these taxes with the help of proper estate planning.

They will help you create a well-articulated estate plan that facilitates the peaceful transfer of assets to your heirs once you’ve passed away. If you are in Michigan and wish to protect your beneficiaries from probate and tax liability, we suggest you give us at The Law Offices of Sean Patrick Cox a call right away.

We are home to seasoned probate estate lawyers that know just how to protect your hard-earned assets and money from the IRS and the State in the event of your passing.

We assist people with estate planning, asset protection, probate administration, and litigation. Call us now to schedule a free initial meeting with our lawyers.