Almost everyone living in Kentucky or elsewhere in the United States can benefit from creating an estate plan. One of the key benefits of creating an estate plan is minimizing the amount of money a person owes to the government at the time of his or her death. In 2020, the federal estate tax exemption is $11.58 million, and it may be possible to effectively increase that number by transferring assets to a spouse.
However, even if a person has a net worth of less than $11.58 million today, that may not be the case in the future. Furthermore, it is important to consider that states may impose their own estate taxes, inheritance taxes or both. Individuals should also consider that the federal estate tax exemption could change in the future. Generally speaking, it is easier for the government to convince the public to increase the estate tax rate as opposed to raising income taxes.
Therefore, if the government needed to raise revenue, it is likely that the estate tax exemption would decrease while the top tax rate stay where it is. Those who are interested in holding assets out of their estate may want to consider creating a trust. Individuals who want to give money or other property away might benefit from creating a charitable foundation.
An estate planning attorney may be able to help a person develop strategies to protect assets and minimize his or her estate tax bill. A trust may be used to hold property outside of an estate and outside of a creditor’s reach. Trusts may also be ideal for those who want to prepare for the possibility that they will become incapacitated. In such a scenario, a trustee will manage an individual’s property per the instructions outlined in the document.