With the minimum value for estates now at more than $5 million before the estate tax kicks in, many Loudoun County residents may think they're in the clear and therefore have no need to create an estate plan. However, it is important that people of all income levels go through the estate planning process and help out their families as much as possible.
Many Loudoun County residents may be in the dark about estate tax rules. The federal estate tax only applies to estates worth more than $5.25 million. However, when figuring in assets, it is easy for one to overlook annuities. Understanding when to include and not to include an annuity's value is important in the estate planning process.
The news about the fiscal cliff had many moderately wealthy people worried in terms of the hefty proposed estate tax. Now, they can rest easy knowing that the federal exemption is still at the $5.25 million mark. This means that there are several reasons to celebrate, as many people now do not have to resort to extreme estate planning measures in order to avoid taxes.
With it being close to the new year, it is time for Virginia business owners to think about their families and how they want them to benefit from the companies they have created. Proper estate planning can save money by reducing estate tax liability.
Parents and grandparents in Loudoun County and all over the country work hard to provide for their children and grandchildren. Many couples have the dream to have future generations succeed and knowing that they can contribute to that success is paramount. Farmers have businesses and land that they hope to pass down to their children. However, with new estate tax laws starting Jan. 1, 2013, many farms will be hit hard. Proper estate planning can help alleviate some of the pain.
If estate tax rates expire as scheduled at the end of this year, the change could affect what millions of Americans leave to their loved ones upon death. The current law leaves 2.4 million households with tax liability at death. That number could increase to nearly 15 million if and when the current estate tax laws expire at the end of this year. The percentage of households affected could increase from 2 percent to 12.5 percent. Changes in estate tax laws highlight the importance of estate planning.
Same-sex couples who have recently married should expect their income tax filing to become more complicated than usual. Because same-sex marriage is legal at the state level and not the federal level, meeting requirements for state and federal income tax returns next spring could be a headache.
How can you set a $65 million property value on a work of art and ask for more than $29 million in estate tax if the artwork cannot be sold? Readers in Loudoun County, Virginia, may be surprised to learn that the IRS did just that for a sculpture that family members inherited after an art dealer died in New York. The artwork cannot be sold because it includes a stuffed bald eagle, a protected species. If the heirs ever sold the artwork, they would be charged with a felony, so it has been appraised at zero. This story shows that even the best estate planning can leave heirs to pay high estate taxes.
Senior executives at Facebook are making strategic moves with their estate planning to avoid several million dollars' worth of estate and gift tax liability on their shares of the company as Facebook goes public.
There are many issues and factors that constitute successful estate planning. One of the biggest in terms of assets is what people have in their retirement plans, primarily IRA's and 401(k) plan. Several potential pitfalls exist in terms of how people withdraw money, transfer it or move it from place to place. If not done properly, it could cost people dearly in taxes.