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Basic Estate Planning Questions

1,122 Views | 11 Replies | Last: 6 yr ago by Harkrider 93
Jimmy Conway
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Is there a dollar figure of estate worth in Texas which one should be aware of that may determine the best way to plan it out so that inheritance taxes are minimized?

If you have a bunch of mortgages what happens to those? Are they simply paid off by the life insurance policy? Or do banks generally cover themselves with their own insurance if the debtor passes?
Dynamite08
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AG
No estate tax for Texas, so only the federal exemption numbers matter (11.2M per individual).

Executor of the Estate looks to settle debts with cash/liquid assets on hand (including life insurance proceeds). After this is completed, they work to distribute all assets as specified by the will. If the person you are referring too has significant debt and little liquidity (and you wish to keep the properties instead of fire-saleing at death to pay off debts/taxes), that's where the life insurance comes in.
Jimmy Conway
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So an estate worth over $11.2M will pay fed taxes and an estate under will not? Whats the approximate tax rate over $11.2? If the estate is kind of right in that ball park and chooses to mark themselves under it, is there any kind of audit or double checking by anyone?

Thanks in advance.
nactownag
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AG
It's 11.2MM per person so a married couple can shelter 22.4MM this year as long as they are using credit shelter trusts.
nactownag
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AG
And the rate above that limit is ~40%
Casey TableTennis
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AG
Jimmy Conway said:

So an estate worth over $11.2M will pay fed taxes and an estate under will not? Whats the approximate tax rate over $11.2? If the estate is kind of right in that ball park and chooses to mark themselves under it, is there any kind of audit or double checking by anyone?

Estate tax laws are a political football and the exempt amount can/will change in the future. While an individual estate isn't currently federally taxable until it crosses $11.2M ($22.4 for a married couple), tax planning for an estate should typically start much lower than that. If someone has $3-$5M+ now and growing, I would be having discussions with a board certified estate planning attorney and CPA and/or financial planner to put at least basic estate tax planning strategies in place. This could provide some protection if the exemption amount is lowered in the future and you can't/don't update the estate plan before death.

It is important to note that with no further legislative action, the federal estate tax exemption amount reverts back to ~$5M + inflation in 2026 (don't quote me on the amounts exactly, saying from memory).

Tecolote
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AG
Jimmy Conway said:

So an estate worth over $11.2M will pay fed taxes and an estate under will not? Whats the approximate tax rate over $11.2? If the estate is kind of right in that ball park and chooses to mark themselves under it, is there any kind of audit or double checking by anyone?

Thanks in advance.
If you've got over $11.2M in assets, you've surely got financial planners and an attorney to be setting up trusts, etc. and not posting questions on TexAgs.
Jimmy Conway
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Och26-58-87 said:

Jimmy Conway said:

So an estate worth over $11.2M will pay fed taxes and an estate under will not? Whats the approximate tax rate over $11.2? If the estate is kind of right in that ball park and chooses to mark themselves under it, is there any kind of audit or double checking by anyone?

Thanks in advance.
If you've got over $11.2M in assets, you've surely got financial planners and an attorney to be setting up trusts, etc. and not posting questions on TexAgs.


We have a meeting set up with an attorney for the 27th. Was waiting on some family to come in for it. Wanted to get a feeling on what to expect.
JSKolache
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AG
Och26-58-87 said:

Jimmy Conway said:

So an estate worth over $11.2M will pay fed taxes and an estate under will not? Whats the approximate tax rate over $11.2? If the estate is kind of right in that ball park and chooses to mark themselves under it, is there any kind of audit or double checking by anyone?

Thanks in advance.
If you've got over $11.2M in assets, you've surely got financial planners and an attorney to be setting up trusts, etc. and not posting questions on TexAgs.
Unless it's tied up in land (i.e. large ranch in W Texas, small place in Hill Country, etc.)
Tecolote
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AG
Oh, that crossed my mind, but even in that case, you've got to have other reasonably sized assets for taxes, insurance, upkeep, etc.
bkag9824
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AG
nactownag said:

credit shelter trusts.


Go on...

Edit: what is ballpark cost on setting this (these) up?
aggiehunter3
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AG
Och26-58-87 said:

Jimmy Conway said:

So an estate worth over $11.2M will pay fed taxes and an estate under will not? Whats the approximate tax rate over $11.2? If the estate is kind of right in that ball park and chooses to mark themselves under it, is there any kind of audit or double checking by anyone?

Thanks in advance.
If you've got over $11.2M in assets, you've surely got financial planners and an attorney to be setting up trusts, etc. and not posting questions on TexAgs.


You would think that, but as a CPA I see people all the time with wealth that have no plan in place. Example: my firm had a new client this year...sole owner C-Corp with $100 million in cash, owner is over 70 with 2 kids and did not have any estate/succession planning prior to meeting with us. Business has multiple revenue recognition issues and was using quickbooks. The 2 kids had no idea of the magnitude of their fathers business. Fortunately they came to us before it was too late. Some of these situations just baffle me.
Harkrider 93
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AG
1500 for a married couple that is a basic one to avoid the estate tax and have directives

some attorneys are around 2500

it will depend on how complex you want it
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