Madison Estate & Gift Tax Planning Lawyers
Know How Taxes Can Affect Your Estate
Many people are used to thinking about federal estate taxes as a specific kind of tax which only gets applied during the event of someone’s death. In reality, this kind of tax cannot be considered as either an inheritance or a death tax, but actually applies to the transfer itself, as it is levied on the assets being passed on to others.
The three components of gift taxes, estate taxes, and generation-skipping transfer taxes are three kinds of federal taxes on wealth transferals that together compose the Unified Transfer Tax. The most recent restrictions and enforcements of these laws were implemented by the president on December 22, 2017, and they can draw large amounts away from the original sum. Therefore, you will need our knowledgeable Madison estate tax planning attorneys to help you minimize or avoid these taxes altogether. We can discuss ways to protect your estate and more.
Call us today at (608) 292-5185 for dependable counsel from our estate planning lawyers at Estate Law Partners, LLC.
What is the Lifetime Gift Tax Exemption?
The Tax Relief, Unemployment Insurance Authorization, and Job Creation Act (TCJA) in 2017 designated that depending on the value of your individual estate, you could receive distinct federal exemptions, which could be higher or lower depending on your marital status. Past these initial tax rates, 40% would still be exempted.
What a unified exemption does is work to forge the gift tax as well as the federal estate tax together. Essentially, this comes out to mean that if you use your exemption for lifetime gift taxes while you are still alive, the exemption for federal estate taxes that would occur at the moment of death ends up being reduced in correlation with your lifetime gift taxes. Spouses can decide whether they want their lifetime gift exclusions to be separate if they are making a tax, or whether they want to conjoin their exemptions together. Fortunately, any gifts that are presented in the normal allotted gift exclusion amounts per annum will not place any restrictions or decrease your unified exemptions for lifetime gift and estate taxes.
How Do Estate Taxes Work in Wisconsin?
One way that the state of Wisconsin differs from some other states is that it has a distinct kind of system that taxes one’s estate through something called a “pick up” tax. What this means is that the state of Wisconsin itself collected either a portion or the totality of credit for any state death taxes which had been permitted by the estate tax return from the federal government. However, because the federal estate tax return no longer collects for state estate taxes, the Wisconsin estate tax has been eliminated, along with any inheritance tax.
What is the Generation-Skipping Tax Exemption?
This third type of transfer tax allows generations to continue passing property even if the transferal occurs by skipping an entire generation, from a grandparent to a grandchild, for instance, or even to an unrelated person where there is a 37.5 year age gap between the two parties.
Explore Your Tax Planning Options
Through the combination of these exemptions, you and your loved ones could greatly benefit in transferring wealth without paying exorbitant taxes. However, the complexity of this process needs to be handled carefully, with the aid of our Madison estate tax planning lawyers.