Do you know what makes up your estate? The list below may surprise you.
Planning your estate helps you take advantage of your tax coupons. It’s a “use it or lose it” deal. Example: If a married couple has a combined total of assets that is over $3M ($3.1M or more), your estate will pay16% Maryland taxes on anything over $3M. So, assuming your estate has $3M (factoring in your life insurance, real estate, retirement plans, etc), your spouse who should only be dealing with issues like funeral arrangements, properly grieving your passing, or comforting your children (if any), will not have to worry about paying the state of Maryland a whopping $80,000 in taxes for your half of the amount over $1M ($500,000). If you had properly planned your estate, that sum would have gone into a Qualified Terminable Interest Property (QTIP) Trust which your spouse can use without having to worry about payment of taxes. In this situation, no federal tax is due since the exemption amount is $5.49M. How about your child or children? Will they know what to do with a $1M dollar inheritance at 18, 20, 21, even 25? What if your child gets sued, has creditor problems, marries an “evil” spouse, has special needs, loves spending money unnecessarily, etc? What will happen to that inheritance? I will leave that to your imagination. Planning your estate enables you to create what I call beneficiary trusts. If properly drafted, this Trust can protect the spendthrift child from themselves, or protects your child against lawsuits, or a divorce, creditors, personal injury claims, etc. How about your IRAs? We all know that your IRAs are growing tax deferred right now until you reach the proper retirement age in the IRS code? What if you die before that age? Do you know you can prolong those tax deferrals for your children’s benefit? A properly planned estate will include a separate IRA Retirement Trust also known as a Stretch or Inherited IRA Trust. The longer your IRAs can grow tax deferred, the more money stays in your estate for your beneficiaries’ benefit. There is power in tax deferred investment. For example, $1 doubled every year for 20 years tax free (at an annual return of 12%) is $1,048,567. Conversely, $1 doubled every year for 20 years at a tax rate of 29% is $45,701. An IRA is treated as “inherited” if the individual for whose benefit the IRA is maintained acquired the IRA on account of the death of the original owner. . Under the IRS Code and Regulations, the IRA assets can be withdrawn based upon the life expectancy of the beneficiary. If you have $250,000 or more in your IRA, consider adding an IRA Retirement Trust to your estate plan. Estate planning is a lifetime process. Personal and legal changes may occur after you have planned your estate. Work closely with your estate planning attorney so that all documents in your estate plan works exactly the way you designed them. There is nothing worse than having an estate plan that fails. So, what are you waiting for? Contact an estate planning attorney today to get started. It’s all about peace of mind. Contact us today for more information on creating estate plans that are specifically designed for your needs. Your comment will be posted after it is approved.
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AuthorBiola Bakare is passionate about protecting you, your loved ones, and your assets through carefully crafted estate plans that gives you peace of mind. Attorney Bakare will also take care of your small business needs with the courtesy and attention you deserve. Call or contact us today for a free consultation. ArchivesCategories |
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From within Prince George’s County, our law firm represents estate planning clients from Laurel, Clarksville, Columbia, Elkridge, Ellicott City, Marriottsville, Upper Marlboro, Mitchellville, Bowie, Beltsville, Glenn Dale, College Park, Greenbelt, Silver Spring, Rockville, Potomac, Washington, D.C. and surrounding areas. The Maryland and Washington, D.C. Law Firm of Biola Bakare, LLC focuses on Maryland and Washington, D.C. comprehensive estate planning, wills, trusts, estates, probate administration, asset protection, children’s trust, credit shelter or family trust, special needs trust, beneficiary planning, incapacity planning, enhanced durable power of attorney, enhanced advance directive, business succession planning, and family limited partnerships. Attorney Biola Bakare offers comprehensive planning as a trust attorney, probate attorney, asset protection attorney, corporate attorney, and business law attorney. Licensed in Maryland, Washington, D.C., and New York. DISCLAIMER: This website is for informational purposes only. It is not to be construed as formal legal advice. Viewing the contents or exchanging emails with the Law Office of Biola Bakare, LLC does not create a business or professional relationship between the parties. No attorney/client relationship will be created with the Law Office of Biola Bakare, LLC without a formal, written legal services agreement. |