Estate planning is more than a rich person’s game. Clear wills and prearranged trusts can prevent needless arguments between inheritors with any size of bequest. However, rules and requirements for estate planning often get more complex when people are dealing with a larger estate.
One popular way of reducing the tax liability on estates that may see a tax on the owner’s death is to make charitable contributions during the owner’s lifetime. Another important deduction is the state and local tax (SALT) deduction, which allows people to deduct certain taxes paid to states and municipalities.
These deductions are popular, with 15 percent of estate holders using charitable deductions and nearly 30 percent using SALT deductions in recent years. But a recent assault on these exemptions by the Internal Revenue Service (IRS) is making it harder to claim them in the near future.
Connecticut, along with neighboring New York State, has some alternative to ease a possible tax hike in estate planning. The Nutmeg State offers larger federal deductions to partnerships, S corporations and limited-liability companies. Some tax advisers also suggest trusts as a way to shelter parts of individual wealth from taxation as part of an estate.
These plans can come with their own liabilities, and the IRS may eventually restrict these options as well. Presently, however, the potential loss makes these precautions recommended for estate planners.
An attorney can help estate planners of all types and levels secure their assets for their loved ones and causes. Legal representation can help make a will or estate plan with the least ambiguity and the most advantages for inheritors.