The applicable estate exclusion amount is now $12,920,000.00 per person (2023)
The tax laws have changed again.
ESTATE, GIFT AND GENERATION SKIPPING TAX PROVISIONS OF NEW TAX BILL
For persons dying during 2021, the federal estate tax exemption will be $12,920,000.00 per person and $25,840,000.00 for a married couple.
The return to a unified gift and estate tax system is a welcome change of $15,000.00 per year.
ESTATE PLANS SHOULD BE REVIEWED
In any event, no Estate Plan should be established and then ignored. These plans should be reviewed every few years – a benchmark is every 7-10 years if under age 50. If over age 50, at least every 5-7 years. Please contact us at the Estate Planning Legal Center, APC if you want to review your Estate Planning documents and believe you may be ready to make an amendment to your documents. An Estate Plan review is $275.00. If changes are needed, this cost is deducted from the cost of changes.
PRROBATE, WHAT WILL PROBATE COST ANYWAY?
Let me give you an idea of the cost of probate. If you had a home with a market value of $500,000, and you owe $200,000 on the mortgage, the cost of probating just this one asset will be about $13,000 to the lawyer and $13,000 to your Executor, for a total of $26,000! Probate is based on the market value of your home (assets), not the equity in the home. Additional fees which accompany probate are the Filing of the Petition fee $435.00 (which is $460.00 for court credit card processing), the Final Order Filing Fee $435.00 (which is $460.00 for court credit card processing). The publishing fee, probate referee fee, and many other misc. fees. The time-frame to complete a probate is 1-2 yrs on average IF everybody involved agrees.
WITH A LIVING TRUST IN PLACE YOU WILL NOT PAY THIS!
What about a Will? – Well, the word Probate means “To Prove a Will.” Wills will go through probate, and probate takes at least a year, many times two years or even longer (at the very minimum-one year) Whether you have a Will or not, you will still go through probate. A Will is you telling the Judge who you want to be your executor and how you want the Judge to allow your Executor to distribute your Estate, all the while making the details of your Estate and your beneficiaries public; names, addresses, ages, relationship to you – all of these are requirements in the the first document filed with the probate court, the Petition.
A REVOCABLE LIVING TRUST WILL AVOID PROBATE!
What about Joint Tenancy? Well, this just delays probate. When the last spouse dies, there will be a probate, unless you have a Living Trust.
What about adding a child as a joint tenant on your property? After all, they can share the property with their siblings after I die.
Wrong. To share an inheritance with other members of the family the beneficiary would incur Gift Tax consequences, AND the property tax rate would increase; Also, if the daughter, or son, whatever the case may be, were to get in trouble with the I.R.S., rack up credit card debt, commits a crime, involves another person in a catastrophic accident, or become involved in a marriage that ends in divorce, this would be a good way to lose your home, even before you die.
WHAT IF YOU DECIDE TO SELL YOUR HOME?
If you sell your home, you may have a $175,000.00 exemption from the Capital Gains Tax but your daughter, or son does not. How understanding will he or she be when you come to her and say: Dad and I want to sell our home and move to Mexico, and hey, you don’t mind paying the I.R.S. $35,000 in Capital Gains, do you? Your son or daughter just may refuse to sign the deed – then where will you be?
Federal Estate taxes are expensive – they start at 37% and quickly go up to 55%. And they must be paid in cash, usually at close of escrow, and most likely within nine months after you die. Since few estates have this kind of cash, assets often have to be liquidated. But estate taxes can be substantially reduced or even eliminated–if you plan ahead.
All of this is only a problem if you die. Do you really think you are going to die? Well, let’s see, if we looked at the latest mortality rate for humans it is 100%. Can you beat these odds? If you have a Revocable Living Trust in place you can lessen the burden on your family, and keep the money you earned in your estate for your family. I know you’re busy and it can probably wait. wait… until when? It’s time to set an appointment and just get it done! Contact our experienced law firm, Estate Planning Legal Center today, we are here to help