Not just taxes for the super rich!
Federal estate taxes are the taxes that are levied on your estate after you die. What this means is that out of the money and assets that you leave behind, a tax will be taken out before your family members get to split up their inheritance. While this is generally considered to be a problem that only affects the superrich, that is not actually true. In fact, you do not have to own all that much before the estate tax will kick in – and the percentages can be pretty high. Therefore, you should do what you can in order to make sure that you avoid some of the tax.
If your estate costs two million dollars or more, then you’ll end up paying forty-six percent of the money over two million. As you can imagine, this can really start to add up. Before you start to think that that is still not a problem for you – two million dollars is a lot of money, after all, you should consider that this two million dollars also includes the money that you have in your retirement plan, stock market holdings and life insurance plan. As you can guess, this amount of money can rapidly increase, especially if you are currently working and have a high life insurance pay out.
The other thing that you should consider is that the estate tax will also cover the amount of money that your home would cost if it were to be sold. After all, this is one of your assets. Considering how much money homes usually cost, this can also increase the amount of money included in your estate by quite a bit.
If you’re worried about the federal estate tax, then you should definitely take advantage of the tools that are available online. These tools will help you plan your estate so that you will not have to worry about paying large amounts of estate tax.
Depending on how much money you have, and what state you live in, there may also be exemptions that allow you to give up to $1,500,000 to your heirs without paying tax on that amount. This can be helpful in reducing the amount of estate tax that the executor of your will pays after you die.