American founding father Benjamin Franklin famously wrote, “in this world nothing can be certain, except death and taxes.” If you are a law abiding citizen, taxes follow you wherever you go. From the sales tax at your favorite department store, to income, social security and Medicare taxes, every dollar you make or spend will be taxed in some way, shape or form. Benjamin Franklin wasn’t kidding.
Making matters worse, the tax code is not an easy document to digest. It isn’t a bit of light reading that can be consumed in an evening. That’s why getting a tax planning attorney who knows the ins and outs of the tax code is an essential financial planning practice. Taxes can pop up at the worst possible time, too. Let’s take a look at how tax planning can help spare your assets from an unneeded tax bill.
Estate Taxes
Also known as the “death tax,” estate taxes bridge Benjamin Franklin’s certainties into one. An estate tax is levied on the assets that are transferred to heirs on the event of someone’s death. And this tax is not a small tax on the same scale as a sales tax; estate taxes average a rather hefty 40% of all transferred assets. That’s huge. There are several tax planning strategies that can be implemented to reduce this burden. While all circumstances are unique, certain trusts, such as an AB trust, and gift giving strategies are a great way to protect assets from the “death tax.” An experienced tax planning attorney can help you figure out which estate planning strategies are best for your financial circumstances.
Creating AB Trusts
An AB trust is a specific type of trust that can be set up to help families reduce their inheritance tax burden. An AB trust is created by a married couple to avoid double taxation on their assets. Without an AB trust, the assets would be taxed upon the death of both spouses. An AB trust avoids this double taxation by dividing the assets into two separate trusts, Trust A for the survivor’s assets, and Trust B for the decedent’s assets. Although the assets placed in the decedent’s trust, Trust B, are not considered part of the surviving spouse’s estate, the trust can be designed to allow the surviving spouse to withdraw income and live in the same house. Upon the death of the surviving spouse, assets from trust A and B go to the beneficiaries, but only the assets in Trust A are taxed.
Got it?
AB trusts are complicated. A knowledgeable tax planning attorney can help you determine how an AB Trust can help you reduce your tax burden and get more of your assets to your intended beneficiaries.
Tax Planning with Kalicki Collier Reno Tax Attorneys
The Kalicki Collier Reno tax attorneys have the experience and knowledge to help you and you protect your hard earned assets from the burden of excess taxes. Our Reno tax planning attorneys understand that tax planning is an individual process, and we will work with your from start to finish to ensure that your tax burden does not jeopardize your family’s future. Kalicki Collier also offers estate planning and probate services. Come check out all of our legal services and contact us today.