Estate Tax Protection
You work your entire life to save and have enough money to comfortably retire—and ideally leave something for your loved ones when you pass away. During your life, you pay all kinds of taxes: income taxes, property taxes, sales taxes, and so on. And at the end, the government even wants to tax you on the assets you have left at your death.
This is known as the estate tax, and in some instances, it includes the inheritance tax or death tax. The best way to protect your assets and your family's future from excessive taxation is to hire an attorney who understands estate tax planning. We can help you reduce—if not entirely avoid—the federal estate tax burden, while working with your financial and other professional advisors. In some instances, we will work with other attorneys to make sure that we have these bases covered.
How Does the Estate Tax Work?
The estate tax is totally separate from federal income taxes and is paid on the net value of all your assets owned at your death. However, there are fairly sizable exemptions to the estate tax, so it's primarily high net-worth individuals and their families who are affected.
That said, the Maryland estate tax rate for deaths that occur in 2021 begins for estates with a gross value of more than $5 million tops out at 16% and is due within 9 months after the decedent's date of death to the Maryland Comptroller. If there are inheritance taxes due outside certain exemptions that amount is 10% or 11.1111% of the gross, depending on how the inheritance tax is paid. In 2021, the federal estate tax rate begins for estates valued over $11.7 million is a whopping 40%, so we're talking about potentially massive sums of money being owed by one's heirs. And that bill must be paid to the IRS within 9 months of the decedent's death.
Exemptions to the Estate Tax
Notably, the Tax Cuts and Jobs Act of 2017 nearly doubled the allowable exemptions to the estate tax, ensuring that even fewer families will be affected:
- Estate tax exemption for individuals expanded from $5.4 million to $11.2 million. For 2021, the exemption is $11.7 million.
- Estate tax exemption for married couples expanded from $10.9 million to $22.4 million. For 2021, the exemption is $23.4 million.
So, unless your estate is valued at more than $11.7 million, you won't have to worry about the Federal estate tax at this time. If your estate is valued at less than $5 million, you won't have to worry about Maryland estate tax at this time. But for those who are affected, there are numerous estate planning strategies available that can greatly reduce the amount owed. We can advise you on the best options for your family.
Advanced Estate Planning Strategies
Families with high-value estates face several complex legal and tax issues—and the estate tax is only one of them. At CHEN Law, we offer a number of advanced estate planning strategies that are primarily aimed at reducing a family's tax burden. In addition to the estate tax, we also help families navigate the gift tax and generation-skipping tax to pass assets on for successive generations without risk of estate tax decimating the estate at each generation.
Some of our most popular advanced estate planning tools and strategies include:
- Life insurance trusts
- Qualified personal residence trusts
- Grantor retained annuity trusts
- Asset protection trusts
- Land trusts
- Dynasty Trusts
- Family limited partnerships or limited liability companies
- Asset gifting
Estate Tax Planning Lawyers in Prince George's County and surrounding counties
You worked hard to build your family's wealth and legacy, so it makes sense to put similar effort into protecting those assets—and that includes protecting them against excessive taxes. Contact CHEN Law to minimize the potential tax burden faced by your family, so you can maximize the inheritance you pass to them.