The importance of wealth preservation strategies is increasing as the number of cases dealing with probate and inheritance property grows. Unfortunately, most people do not realize that their house can be a valuable asset that could be lost through ill-advised wealth protection strategies, such as purchasing an inherited home or real estate properties. Suppose you are considering protecting your assets through any sort of financial means. In that case, you must seek the advice of an attorney who is knowledgeable in the various strategies available for securing your wealth in the event of an unexpected tragedy or emergency. Protecting your assets from the ravages of time and distance may require the services of a professional attorney with extensive experience in estate planning and asset protection law.
Use Your Estate Tax Exclusion
The very first rule that you must know about your estate is that you use your whole estate or leave it in the hands of a trust. This means that anyone can use no part of it for any purpose. You also are responsible for a greater federal estate tax. Unless you’re neither a U.S. citizen nor a legal resident of the U.S., you’ll pay the U.S. and perhaps state gift taxes on any property you give to a relative. And if you file an inherited gift tax return, your gift should be tax-free because your estate tax exclusion can wipe out the gift. However, if you use your whole estate or leave it in the hands of a trust, then you have the choice to pay or retain income tax on any part of your estate that you can use.
If you choose to retain the income tax for certain assets, then you’ll want to be sure to discuss this with your accountant during your yearly examination. Most people aren’t aware of their federal estate tax exclusions and don’t pay the full amount on their federal estate taxes. Because of this, some people end up owing more in federal estate taxes than they earned. Because this is a relatively new tax, most states don’t even have information on the exclusions that apply in your state.
Federal estate tax exclusions can apply to a specific asset or both assets and liabilities. For example, there may be marital debt exclusions, joint debt exclusions, or property purchased within one year from a living trust, as well as one stock and two non-diversified instruments of wealth. If you use one or more assets during your lifetime, but those assets don’t meet the exclusions listed, then your spouse’s estate won’t be subjected to the tax on those assets.
Title Assets to Avoid Probate
Another estate planning idea to relieve your loved one’s financial burden is assigning joint ownership or beneficiaries to various assets to avoid probate. This method avoids probate entirely by letting the assets pass quickly after your death to your chosen beneficiaries. This provides immediate access to funds that are needed without any concerns of tax liability. Although many individuals use this method, it is often abused. It can lead to asset forfeiture if the owner does not make timely payments to the creditors or maintains poor accounting practices.
Probate can be avoided by using asset-protection trusts and establishing trust of your own to hold all your assets’ title. At the same time, you are alive and use the trust as a vehicle to release payments to your beneficiaries upon your death. Some people also use probate settlements to release large estates or taxes. These methods can provide instant relief from probate while also avoiding probate by releasing large estates and large taxes at the same time. Probate can be very complex, time-consuming, costly, and cumbersome when handled by a probate attorney. Other options can provide quick access to cash and release large estates without probate.
Monitor Retirement Plan Assets
One of the best things you can do for your financial future is to keep track of your retirement assets so that you can give them to your family when they need them most. As we all know, there will come a day when we need to fund our retirement accounts, and one of the best ways to do this is by saving as much as you can. By saving as much as possible, you will be able to provide your family with an income without having to rely on a pension plan. In addition to that, you will also be able to keep enough assets liquid to meet any unexpected expenses that may arise. As we all know, one of the main reasons that people have a hard time saving for their retirement is because they don’t keep enough liquid assets available to them.
An additional way that you can use to monitor retirement plan assets is to perform an income tax audit yearly. If you aren’t sure what an income tax audit is, you should know that it is conducted by a professional to determine whether you are eligible for any of the various tax breaks you are entitled to receive. These audits will help you make sure that you are taking advantage of any tax breaks that you are entitled to and will allow you to stay out of debt and satisfy estate taxes at the same time. These audits will also help you to see if there are any other assets that you can sell to pay off any debts that you might have and to avoid paying taxes at all.