Estate planning can be used to address a wide range of issues like avoiding probate, reducing tax burdens, protecting assets from creditors, planning for incapacity, and passing one’s legacy to beneficiaries. The diversity of benefits offered by effective estate planning is somewhat of a mixed blessing because it can leave individuals confused about their many estate planning options. Since no two people are in precisely identical situations, estate planning involves much more than artful drafting of estate planning instruments like wills, trust agreements, and power of attorney documents. Estate planning is about building an overall strategy that best satisfies your particular needs and objectives. While there are many issues to be considered when constructing a New Mexico estate plan, our Santa Fe Estate Planning Attorneys have provided a few suggestions for avoiding estate taxes in this blog post.
Giving Assets Away Prior to Death:
If you are concerned about avoiding estate tax, one strategy to prevent the federal government from taking a big chunk out of your estate’s value is to give away the bulk of your estate before you die. The gift tax exclusion for 2013 is $14,000 per year per recipient which can be doubled for a married couple. This means that you can give away $28,000 a year to each gift recipient without the individual incurring IRS gift tax liability. Because you can give this size gift to multiple recipients on an annual basis, this strategy of transferring one’s assets to one’s family and loved ones can result in a significant reduction or complete elimination of estate tax.
Creation of a Charitable Trust:
There are many forms that a charitable trust can take so a complete discussion of these trusts is beyond the scope of this blog post. However, the basic principle involves making a gift of assets to a charity while receiving income during one’s life from the trust. This form of trust can reduce estate taxes that would otherwise be owed to the federal government.
Establishment of an AB Trust:
This form of trust involves each spouse essentially leaving their property to the other spouse for life with the remainder passing to their children. When one of the spouses die, the surviving spouse can use the income in the trust and under certain circumstances the principal can be transferred into the trust. This form of trust can double the available estate tax exemption available to the surviving spouse.
How Estate Planning Can Provide Valuable Asset Protection
The above information is provided to illustrate general principles of law and should not be interpreted as a specific legal opinion on an individual case. You should contact experienced legal counsel to get specific legal advice that is based upon your specific circumstances.
If you have questions about estate tax liability or exemptions, our New Mexico Estate Planning Law Firm may be able to help. The New Mexico Estate Planning Attorneys at Jay Goodman & Associates, PC offer a free consultation in our centrally located offices in Santa Fe and Albuquerque so that we can discuss your specific situation. Call us today to schedule your free consultation at (505) 989-8117 to learn about your rights and options.
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