A concept that you likely will hear over and over when involved in estate planning in St. Louis is the importance of avoiding probate. There is good reason for this; the probate process can exact a heavy financial toll on your estate. Yet many who come to see us here at TDD Attorneys at Law LLC only view probate as a potential drain in their estate assets. There are other expenses that your estate (and by extension, your executor and beneficiaries) could face, such as estate taxes. Fortunately, there are steps that you can to avoid them, too.
An established estate tax threshold exists to help determine whether or not any taxes on your assets will even be due once you have died. According to the Internal Revenue Service, the threshold for 2017 is $5.49 million. What this means is that as long as the taxable value of your estate is below that amount, you qualify for an estate tax exemption.
You can also choose to combine your exemption with the value of your spouse’s to protect up to $10.98 million from being taxed. However, this requires forethought on yours and/or your spouse’s part. If you, for example, left your spouse an estate of $4 million, those assets would not be taxed. However, if your spouse then combined that with $2 million in other assets, his or her total estate would exceed the tax threshold, and would be taxed upon his or her death. To pass your exemption on amount on to him or her, an estate tax return must be filed the year of your death (even if no taxes are due) electing portability. Once that’s done, you exemption amounts are then combined.
More information on avoiding estate expenses is available here on our site.