Louisianans from every demographic are advised to think about the value of a comprehensive estate plan. This is true for people with limited income and assets and those who are considered wealthy with a vast portfolio. For the latter group, however, there will be more to think about and determining how to pass their assets to their heirs with as little stress as possible can be critical. A common worry revolves around taxes and how much it impacts estate planning. This should be considered seriously when crafting the document.
For 2020, the tax exemption for an estate sits at $11,580,000. While most people do not have an estate this large, tax implications can affect anyone. People who think gifting property to loved ones will shield them from the tax implications may be mistaken. The total value of the estate is based on what the person controls. It can be reduced by leaving specific amounts to a spouse and to charity. Taking certain steps can be key with people who have a high-net-worth.
Planning well in advance is a wise decision. This can involve legal professionals experienced in estate planning, accountants, tax experts, investment specialists and more. The plan should have a detailed strategy to pass the assets to the desired recipients. It does not necessarily need to be heirs alone. It can also be to charities. Tax efficiency is a goal for those who have substantial assets. Valuing the assets is fundamental and there are legal tactics to do so. For example, splitting the ownership of an asset in half could shield it as most people purchasing it are reluctant to control only half after it is sold. Creating a limited liability company (LLC) or other business entity for the assets can limit the person’s ownership and be a protective device against onerous taxes. Trusts can also be useful toward this end.
There are just some examples of alternatives available to maximize the amount that a testator can keep for heirs and avoid losing too high a percentage of it to taxes, fees and costs. Transfers and legal strategies to help with taxes, creditors and judgments inevitably requires legal help. To ensure that the estate planning strategies cover all the bases and achieve a client’s goals, professional advice could be essential. Discussing these goals and strategies is a foundational aspect of estate planning and should not be ignored.