Getting your estate plan in order is a big undertaking, especially when you have a higher net worth that encompasses a variety of assets. The higher the value of the estate, the more planning you may have to do. As of 2020, the exemption for having to pay federal taxes on an estate is $11.58 million for a single person or $23.16 million for a couple.
The Tax Cuts and Jobs Act instituted a unified credit that covers estate and gift taxes. If the estate is valued at more than the preset amount, it is taxed at 40% of the value. The taxes are only applicable to the value that’s in excess of the allowed amount.
Because the laws are so complex and there is so much at stake with these cases, you must ensure that you’re working with someone who is familiar with the laws that govern these situations. You have several individuals to consider as you set the estate plan. This includes the person who serves as the executor, as well as those who are the trustee, medical power of attorney and financial power of attorney.
You also need to consider what’s going to happen if you become incapacitated because your assets will still need to be cared for. This is where your financial power of attorney comes into the picture since that person is able to pay bills for you and handle other aspects of caring for the assets.
Ultimately, having a well-executed estate plan benefits you and your loved ones because it outlines the plan for them. They can focus on the healing process if you’re incapacitated or pass away.