Estate & Gift Tax Planning

Estate & Gift Tax Planning Attorney

You work hard for your money and you are taxed on that money as you earn it. Unfortunately, if you want to pass on your wealth to your loved ones, you could face additional taxes. Depending upon the value of the assets that you want to give to others, you could be taxed both on gifts you make during your lifetime and on the transfer of wealth after your death. Having a gift and estate tax attorney is crucial if you want to give your family what they deserve.

Paying taxes on gifts and on assets after your death can significantly reduce the wealth that you want to provide to the people you love. You do not have to lose this money to the government. Let Anderson, Dorn & Rader, Ltd. help you to develop a strategic plan for avoiding gift and estate taxes so you can use your money to support loved ones. Give an expert attorney a call at (775)823-9455 to get personalized tax planning advice and answers to questions you have about gift tax and estate planning

What are the Rules for Gift Tax and Estate Tax?

The state of Nevada does not impose an estate tax on anyone who has passed away after January 1, 2005. Nevada also does not impose a gift tax. This does not mean you don’t have to worry about these taxes if you live in Nevada.

The federal government will try to tax both gifts you give and estate assets that you pass on, if the gifts or estate assets are valued highly enough. The federal government imposes an estate tax on any estate that exceeds $13.61 million as of 2024. Gift taxes are also imposed upon gifts that exceed the lifetime limit, which is the same $13.61 million as of 2024.

How can I Avoid Gift Tax and Estate Tax?

Although both gift and estate taxes can be burdensome, they are also both avoidable in many circumstances if you get legal help form an experienced gift and estate tax attorney. Anderson, Dorn & Rader, Ltd. can provide you with advice on how to avoid these taxes through strategic tax planning.

One of the most important things to realize about gift tax is that each gift giver can give $18,000 to each gift recipient annually without the tax being assessed. This means if you have two children, you could give $18,000 to each child for a total of $36,000 given. Your spouse could also give $18,000 to each child. This means that your son could get $36,000 total from you and your spouse combined, and so could your daughter.

Gift taxes are also not assessed on gifts given between spouses, and you do not pay gift taxes if you use the money to directly pay things like tuition or medical bills. Because you can end up giving a lot of money away each year, giving inter vivos gifts (gifts during your lifetime) is one way you can reduce your taxable estate and avoid estate tax.

There are also ways to reduce or avoid estate tax as well. First and foremost, there is no tax assessed on assets transferred to a spouse after death. If you do not use your $13.61 million exemption because you leave all of your wealth to your spouse, you can also pass your exemption on. Your spouse could now transfer $27.22 million upon death to your children or other chosen heirs. This means simply leaving your wealth to your spouse can help many people avoid estate taxes entirely.

If you do not want to leave wealth to your spouse or if doing so won’t allow you to avoid estate tax entirely, you can also explore other tools that can allow you to reduce or avoid estate tax. These tools could include the creation of a family limited partnership and the use of trusts. Anderson, Dorn & Rader, Ltd. gift and estate tax attorneys can assist you with the creation of a personalized plan so you can find ways to keep your wealth safe from the government.

How Can a Reno Gift and Estate Tax Attorney Help Me?

Don’t lose your hard earned assets due to large tax bills assessed when you give a gift or when you pass away. Speak with a Reno gift and estate tax planning attorney to find out what options you have for passing on your money on without giving the IRS a big piece of it. You can contact Anderson, Dorn & Rader, Ltd. today to get personalized tax-planning assistance to help you reduce taxes or avoid taxes altogether. Call now to get started.

Estate & Gift Tax Figures

FEDERAL

Estate and Gift Tax Applicable Exclusion:

The amount that can be passed free of federal tax. Whatever amount is used during lifetime is no longer available for use to pass assets at death. The Estate and Gift Tax Applicable Exclusion is currently $13.61 million.

Annual Gift Tax Exclusion:

The amount that can be given to each person you want without using any Applicable Exclusion. The Annual Gift Tax Exclusion is currently $18,000.

Generation-Skipping Tax Exemption:

This allows for giving to people who are grandchildren or other “skip persons.” It may also be used as a sophisticated way of avoiding Federal estate tax at the death of a child. Each person currently has $13.61 million of Generation-Skipping Tax Exemption.

state

Estate Tax:

In addition to the Federal Estate Tax, many states have a State Estate or Inheritance Tax. State Estate and Inheritance Tax may apply at a much lower level than the federal tax. It may apply when a person dies when resident in or owning property in any of the many states with such a tax.

Estate & Gift Tax Planning FAQ

How much will my family pay in estate taxes?

The answer to this question all depends on the extent of your resources as they compare to the amount of the federal estate tax credit or exclusion. At the time of this writing, the exclusion is over $11 million, and there are annual adjustments to account for inflation. If the value of your estate does not exceed this amount, there would be no federal estate tax exposure.

What is the estate tax rate?

The federal estate tax rate is a whopping 40%, so it can have a very significant impact on your legacy if your estate is in taxable territory.

Is the estate tax applicable on transfers to all relatives?

The answer is yes, with one exception. If you are married, you can use the unlimited marital deduction to transfer assets to your spouse tax-free and vice versa. One caveat would be that the parties involved must be citizens of the United States.

You can just give gifts to avoid the estate tax, right?

Why don’t we hear from the IRS when we give birthday and holiday gifts?

In addition to the unified gift and estate tax exclusion, there is also an annual gift tax exclusion. This allows you to transfer up to $15,000 to any number of people within a calendar year without utilizing any of your unified exclusion.

You can pay school tuition for students tax-free, and there is a health care exemption that allows you to pay medical bills for others in a tax-free manner. This would include health care insurance premiums.

Are there estate taxes on the state level as well as the federal level?

Yes, there are, but we are fortunate here in Nevada because we do not have an estate tax in our state. However, if you own valuable property in a state that has an estate tax, it could be a factor for you.

If you have a farm or a ranch that you are going to pass along to your family, is the estate tax an obstacle?

Everything that you own, including real property such as a farm or a ranch, is looked upon as part of your estate by the Internal Revenue Service. People are sometimes forced to sell large tracts of land that have been in families for generations just to pay the estate tax.

Is there anything that you can do to mitigate your exposure?

There are estate tax efficiency strategies that can be implemented to keep a maximum store of assets in the family. The ideal way to proceed will depend upon the circumstances, because each case is different, and there are many tools in the estate planning toolkit.

The above being stated, in a general sense, irrevocable trusts can provide a solution in many cases. Generation-skipping trusts, grantor retained annuity trusts, charitable lead trusts, and qualified personal residence trusts are some of the devices that can be used to lessen the death tax burden.