We know we must pay taxes and understand it helps our society. But we all agree that we don’t want to pay more taxes than absolutely necessary. So when establishing your estate plan, there are ways you can reduce the taxes of your estate. But what is tax avoidance, and what does it have to do with estate planning?
Estate and inheritance taxes are two separate taxes that you’ll want to consider when setting up your estate plan. Inheritance tax is levied on the beneficiary, and estate taxes are levied on the deceased person’s estate. Both can reduce the value of the inheritance you leave your loved ones.
Illinois does not have an inheritance tax, but it does have an estate tax. This tax is applied to estates worth over $4 million. Everything in your estate combined makes up your estate’s worth. This can include:
Don’t forget to think about your assets or property in other states. You must consider their tax laws when creating your estate plan.
Thankfully, there are ways to reduce your estate’s total net worth to minimize these taxes.
There are some legal ways to reduce the total worth of your estate or keep it under $4 million to avoid estate taxes. Working with an experienced estate planning attorney can help you decide the best way to do this.
Some of these strategies are:
There are various types of trusts, and possibly one that works best for you. Your estate planning attorney can lay out the different options for your estate. Together, you can plan the best way to build your estate plan to minimize taxes.
The executor of the will is responsible for determining the value of the estate assets and the estate debt. They must then file the estate tax return and pay estate taxes. But they don’t have to do this alone; the executor can work with your estate attorney to manage the estate taxes and pay them from the estate assets.
Call us for more information on setting up an estate plan specifically designed for you. We will help you understand inheritance and estate taxes, how they work together and how to minimize taxes. Contact Us today and schedule an appointment at 630-864-5835.
AREAS WE SERVE: DuPage, Kane, Lake and Will counties.
