Simple, Right? IRS Guidelines and Estate Planning Assistance

Simple, Right IRS Guidelines and Estate Planning Assistance

The labyrinth of federal and state laws on estate planning can be daunting and confusing to a family.

As the old saying says, you can’t take it with you, but you can hand it down to the next generation, to continue the important work that you’ve done throughout your life, and to pursue that age-old goal of making life better for those who come after you.

But the webwork of laws and rules that apply to estate planning is often frustrating to those pursuing end-of-life planning or other estate planning scenarios, for a number of reasons.

First of all, if you just read some of the available documentation from the Internal Revenue Service you start to get an idea of what’s involved:

“The Estate Tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death … The fair market value of these items is used, not necessarily what you paid for them or what their values were when you acquired them. … The includible property may consist of cash and securities, real estate, insurance, trusts, annuities, business interests and other assets. … certain deductions … are allowed in arriving at your ‘Taxable Estate.’ These deductions may include mortgages and other debts, estate administration expenses, property that passes to surviving spouses and qualified charities. The value of some operating business interests or farms may be reduced for estates that qualify.”

In looking at a few elements of these rules and regulations, we can see why estate planning often involves hiring professional representation.

Changing Guidelines

Like other kinds of financial laws, these rules are liable to change over time. In fact, you could say that estate laws change more quickly than some other kinds of financial laws – the limits and amounts in order are constantly being changed for inflation, cost of living and related issues.

Just take a look at this – again, from IRS regs:

“Most relatively simple estates (cash, publicly traded securities, small amounts of other easily valued assets, and no special deductions or elections, or jointly held property) do not require the filing of an estate tax return. A filing is required for estates with combined gross assets and prior taxable gifts exceeding $1,500,000 in 2004 – 2005; $2,000,000 in 2006 – 2008; $3,500,000 for decedents dying in 2009; and $5,000,000 or more for decedent’s dying in 2010 and 2011 (note: there are special rules for decedents dying in 2010); $5,120,000 in 2012, $5,250,000 in 2013, $5,340,000 in 2014, $5,430,000 in 2015, $5,450,000 in 2016, $5,490,000 in 2017, $11,180,000 in 2018, $11,400,000 in 2019, $11,580,000 in 2020, and $11,700,000 in 2021.”

Terminology and Complexity

Lawyers and agencies don’t tend to say things in plain English. It frustrates the average person, because we all have multiple goals and objectives to pursue, and clarity is very valuable. So having dedicated consultants on board can be a good idea.

Asset Complexity

Anyone who has significant net worth knows that assets are complex. It’s not as simple as just saying “I have X, and it costs X money.” There’s depreciation and use and all of the rest. Dedicated legal representatives can help go over all of these logistics and how they apply to a financial plan that’s on paper.

Let Hedtke Law Group help you through these types of important planning.