Estate planning is a necessary procedure. It entails the carefully prepared distribution of a person’s assets in the case of death or an event that renders them unable to make reasonable decisions. Estate planning can help you avoid probate court and taxes. Some of the tax benefits of estate planning include:
- A reduction in estate taxes
- Trusts can eliminate death taxes
- Charitable trusts may avoid taxes on assets after death
What Are the Deductible Tax Benefits to Estate Planning?
Like all other financial decisions, the amount of tax you pay will influence your estate plan. It is critical to realize that your financial records and earning history will live on after you pass away. The beneficiaries of your assets may be obliged to pay certain taxes. These can include income tax, superannuation death benefits tax (when provided to a non-tax dependent), or capital gains tax, depending on the circumstances.
There might be various expenses related to your estate plan. The most prevalent are the fees paid to design, review, and amend estate-related papers such as wills, trusts, powers of attorney, healthcare proxies, and other documents. But are those estate planning fees tax deductible? Some estate planning fees may be tax deductible. So, talk to estate attorneys to make the best arrangements and minimize taxes for your estate and assets.
Tax savings can be obtained by specifying your superannuation allocation. Nominations for beneficiaries can be bound to your will as a way to ensure that your superannuation will be distributed in accordance with your wishes. There are a few qualifications for beneficiaries to receive a superannuation pension upon your death. Unless the super fund’s trustee receives an official nomination, your superannuation will be paid to a super dependent at the discretion of the trustee, typically disregarding your will. You may ensure that your loved ones benefit from your estate rather than tax collectors by explicitly stating how you want your super to be distributed. This includes tax-saving provisions in your will and a valid, up-to-date beneficiary nomination in place. So, consult with your attorneys and leverage the tax benefits to estate planning.
You can pass assets along worry-free with the current law regarding the step-up in basis (the gain between when an asset was sold compared to when it was acquired) , a big advantage when transferred to a beneficiary. This “step-up” can easily be preserved when using the grantor trust rules in both revocable trusts (often referred to as living trusts) and irrevocable trusts (often used for asset protection plans).
Find out more about tax benefits and estate planning by reaching out to Paths Law Firm today!