People who wish to minimize estate taxes and keep their personal and financial details private should consider inheritance tax planning using legal devices such as living trusts and Texas wills. One of the main differences between these stratagems is that wills, being subject to the probate process, are required to be filed and records relating to wills are available for public access, whereas living trusts are treated privately by the courts and their details are not available to the public.
Estate taxes have been eliminated in Texas, so that in that state property may be inherited without payment of any state tax and in the case of modest estates the process of obtaining probate is streamlined and inexpensive. Federal inheritance tax is levied on larger estates, however, and it is in these cases that people can benefit from inheritance planning to reduce the level of federal inheritance tax payable on their estates. The levels of federal inheritance taxes are quite punitive, as high as one third of the estate value, and are payable in cash. Often heirs are forced to liquidate the property they have inherited – real estate, businesses, jewelry or valuable collections – at a loss so that they can fulfill their federal tax obligations. To be sure that assets are passed on to the inheritors, and do not need to be sold on order to pay federal inheritance taxes, estate planning attorneys will help with making Texas wills and setting up living trusts.
If you have worked hard to accumulate assets during your lifetime, and wish your heirs to gain the most benefit from your estate after your death, consider consulting an estate planning attorney. A professional inheritance tax planner will be able to explain the best legal devices for your particular circumstances so that you can decide whether a Texas will or living trust is a way of ensuring that your belongings are dispersed in the manner that you wish.
- Importance of Inheritance Tax Planning (2010taxes.org)