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Proper planning can prevent high tax bills for your estate

Many people think that estate planning can be as simple as making a will or itemizing what items or assets should be given to whom. While this may at least address the questions surrounding “who gets what?” it does not protect the assets fully in the least. Laws surrounding wills, inheritance tax, the distribution of assets and personal property are complex. When proper estate planning is not conducted, wealth protection and asset management may be given up to some degree.

Actor James Gandolfini’s will is a great example of a man who tried to be generous to many people that he loved but that, in the end, leaves many of them with high tax bills—and much of his estate essentially “lost” or paid out in taxes. A critical thing people should remember when considering wills and trusts, is that when there is a will, all assets given to the surviving spouse are “safe” from taxes. Assets bequeathed to anyone other than the surviving spouse are subject to taxes.

There are two simple ways to avoid the unexpected taxes after death. One is to leave all assets to the surviving spouse. Another is to set up a trust instead of a will. In the Gandolfini example, either of these would have saved an inordinate amount of money across the entire estate. Both of the actor’s sisters received a lump sum from the will. Taxes will be assessed on those amounts now and will also be assessed when each of the sisters eventually dies themselves, if any of the money remains.

When you are considering estate planning, seeking professional legal counsel can save you money and protect your estate. Take care when planning for your post-death asset future and your heirs will be cared for in the best ways.

Source: FOXBusiness, “Lessons learned from James Gandolfini’s will,” Gail Buckner, July 15, 2013

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