The consequences that can come about due to estate or inheritance tax are often overlooked due to too many individuals simply assuming the tax will not apply to them. We need to keep in mind that real estate prices are on the rise the possibility of such a tax is a real possibility. And if a taxpayer fails to pay what is considered owed they could then be penalized. It’s important to note that the inheritance tax threshold has not risen at the same rate as have real estate costs.
Because individuals do not always understand that they may owe an estate tax, it’s a good idea to speak to attorneys or other professionals to determine whether such a possibility exists. We also will wish to find every possible legal means to reduce the tax liability that one may owe when it comes to inheritance.
There are a variety of steps each of us will wish to take to make certain we can pass on our wealth to our heirs in the manner we desire. We can create a will to express how we want our estate distributed and appoint certain individuals to see that our wishes are carried out.
We can also mitigate the tax consequences when passing on this property in a number of ways including setting up of trusts, joint ownerships in companies or even partnerships. We do need to make certain that the setting up of these items is done properly, however, so that the legal requirements are complied with.
If we don’t address the tax issues, however, the whole purpose of estate planning can be thwarted.
Source: Property Forum, “Real estate and inheritance tax,” Mark Benson, May 13, 2014