Next to the Alternative Minimum Tax, the Estate Tax is one of the more brutal taxes we have. If you are married, you can get around it.
When planning your estate with your husband or wife, there are key points to keep in mind. Luckily, the IRS has gone a long way in ensuring that the estate of individuals is able to be dealt with after death. While discussing the future, you and your spouse should look into the various federal estate marital tax deductions. Under this tax law, after the death of the first spouse, expenses and interest related to the estate inherited by the surviving spouse is deducted from the passed spouse’s estate. Simply, this prevents the survivor from being taxed an unfair amount.
This helpful tax tool can be made useful in many ways. Depending upon the way your will is set up, this deduction can save the survivor much burden and cost. If following the rules and complying with requirements completely, this can prevent the surviving spouse from being liable for the deceased’s tax liabilities. This gives the surviving spouse the ability to take his or her time in making important decisions for the left estate. It also gives the surviving partner the money that may be necessary to sustain life standards.
When making arrangements for imminent death, there are several ways to transfer the estate into the surviving spouse’s name. You can either transfer by will or transfer by trust. If you transfer by will, it will be an outright transfer of the estate. While this is the most common way to handle estate transfers, it can also get a bit messier. The survivor will have complete control of the estate and outright ownership responsibilities. Although this sounds preferable, it also means that the surviving spouse will typically end up assuming pressures of maintaining and selling the estate.
Transferring by trust is a preferred method by many in law. With a trust, the spouse is given more authority and long term security over the estate. A trust gives the surviving spouse say, but lessens the burden as a will would entail. Either a Qualified Terminable Interest Property Trust or a Power of Appointment trust can be enacted to ensure wellbeing of the estate and the surviving spouse.
Estate taxation can be costly and difficult. Planning ahead of time and making use of marital estate tax education can help put you at ease. The passing of a loved one is difficult without having to worry about paying taxes and other monetary concerns.