A Will alone usually doesn’t have much effect on estate taxes. There are several kinds of taxes that might apply to an estate or inheritance. There’s the Federal Estate Tax, which applies to estates over $2 million in 2008 and over $3.5 million in 2009. In 2010 the tax is repealed and then reinstated in 2011 for estates over $1 million. Congress could change this, and many experts expect it to do so. This means it’s very difficult at the moment to predict when this federal tax will apply to an estate.
There are also now estate taxes at the state level, and you have to know your state’s requirements and the size of estate a state tax will apply to. A few states also have inheritance tax. This is usually applied to all the property in an estate, no matter what size the estate is, and also to all real property located in the state, even if the Will is being probated somewhere else.
The estate planning techniques used to avoid estate taxes usually involve transferring property to Trusts so that the final estate is too small to pay estate taxes. A Will doesn’t help reduce the size of the estate, so it doesn’t reduce estate taxes. A Will generally only saves on the expenses of probate (the legal process for transferring title of property from the deceased to the beneficiaries), because probating an estate with a Will is usually less expensive than probating an estate without a Will. A Will might also save money by using state statutory language that will allow your estate to be exempted from probate.
If you have questions about estate taxes, you should consult an attorney and make sure your estate plan is updated as the laws change.
State Law Center
|
Legal Resource Directory
|
Legal Articles
|
Insurance Advice and Quotes
|
FreeAdvice Answers
|
Community Forums
