The Tax Consequences of Leaving No Will or Estate Plan

This time of year, everyone is thinking about taxes, but taxes are something you should plan for long before April 15. When you do not leave a will or, better yet, a full estate plan, you may incur tax consequences that take money away from those you love and want to take care of. By planning ahead and using the correct financial instruments, you will be able to reduce your tax burden and have more control over your assets.

 Why Have a Will and Estate Plan?

 Without a will, your estate, including all your assets and properties, will enter probate. This means the courts will take the lead in administering your assets. Even if the eventual recipients of the assets can successfully receive them, there may be little regard for the tax implications they will face.

 Having a complete estate plan will provide financial protection that will shield your family from unplanned tax burdens.  Tax planning is a vital part of the considerations when doing estate planning. Without a well-prepared estate plan, there are numerous taxes beyond income taxes that you or the recipients of your assets may be subject to pay, including:

• State and federal estate taxes can impact those passing on significant assets to their family, whether during their life or after their death.
• Gift taxes may be incurred when transferring a high amount of money or assets.
• Capital gains taxes can result from selling certain assets or property.

 To reduce your tax burden, you can use some of the following strategies:

• Consider annual gifts to family and loved ones.
• Create trusts to hold your assets.
• Set up charitable giving as one-time or recurring gifts.
• Start business tax planning well in advance.

These are some of the strategies you would miss out on if you did not prepare with a will and an estate plan. By using some of these strategies, you may pass along more of your assets to your family without incurring significant tax penalties.

Let Our DuPage County Estate Planning and Tax Planning Attorneys Help

Creating strong estate planning instruments, including wills and trusts, can be a beneficial way to reduce your tax burden. Furthermore, estate planning allows you to maintain control of your assets and dictate who will receive those assets when you pass away. The skilled Naperville estate planning lawyers at the Gierach Law Firm can help you understand your options and plan ahead to lower the taxes you will pay. Contact our office at 630-756-1160 for a consultation.

Source:

Illinois State Bar Association