You may be going through life under the impression that the estate tax is only levied on people who are extremely wealthy. This is a misconception that could potentially cost your heirs a significant amount of money.
In fact you do not have to be Bill Gates or Warren Buffett to have estate tax concerns. There is an exemption, and right now it stands at a relatively modest $5.12 million. However, at the end of this year the parameters of the estate tax are scheduled to change.
When 2013 arrives the estate tax exclusion is being trimmed down to just $1 million, and the maximum rate of the tax is rising from the 35% that we have at present all the way up to a rather eye-popping 55%.
With this in mind you would do well to inventory your assets carefully and position them appropriately. A tool that can help you to do this would be a life insurance trust.
In brief, when you own a life insurance policy the proceeds become a part of your taxable estate for estate tax purposes. If you were to have a life insurance trust purchase a policy on your life the proceeds would not be your property, and as a result these resources would be out of the reach of the estate tax.
Life insurance can be very useful when you are crafting your legacy, but you must position it wisely. To discuss the matter with an expert, take action right now to arrange for an informative consultation with a seasoned, savvy South Carolina estate planning lawyer.
- Preparing for Coronavirus - March 10, 2020
- Incapacity Planning - December 20, 2018
- Special Accounts for People with Special Needs - December 17, 2018
