Estate planning is a powerful tool when it comes to preserving your assets and minimizing the burden of taxes for your beneficiaries. Kathleen Thomas, a seasoned Pennsylvania estate attorney, sheds light on how proper estate planning can achieve these vital goals.

Understanding the Federal Estate Tax Exemption

The federal estate tax exemption is a key factor in estate planning. Currently set at $12.2 million, it only applies to estates exceeding this threshold. For many individuals, this exemption may not be a concern. Moreover, in Pennsylvania, spouses are exempt from paying inheritance tax, which can be a significant advantage for married couples.

Navigating Joint Assets and Taxes

However, issues may arise when it comes to joint assets involving non-spouses. For example, if you jointly own property with your children, they may be subject to a 4.5% tax on their share. This scenario often occurs when people try to avoid estate taxes by jointly owning assets. It’s important to understand that even in such cases, taxes can’t be entirely avoided.

Family Limited Partnerships as a Solution

A valuable strategy to consider is the establishment of a family limited partnership. This arrangement can help you preserve assets and minimize taxes. Assets held within this partnership are not subject to the same tax rules as standard joint ownership. However, it’s essential to note that beneficiaries don’t receive a step-up in basis. This means they inherit the assets at the value assigned when they were granted shares, potentially leading to a capital gains tax when they sell the assets.

In summary, estate planning is a powerful tool that can help individuals maximize their assets and minimize tax liabilities for their beneficiaries. Depending on your specific circumstances, strategies like family limited partnerships can be advantageous but require careful consideration. Consulting with an experienced estate attorney like Kathleen Thomas can ensure your estate plan aligns with your unique goals and circumstances, ultimately benefiting your loved ones.

If you live in Pennsylvania, and would like to hire Kathleen for your Estate Planning and Administration Case or legal assistance, visit Kathleen Thomas’ profile on the Esquire Elite website here: https://www.esquireelite.com/attorney/kathleen-thomas/.

Disclaimer: The information in this article is not intended to be legal advice. Each situation is different, and the insurance laws in your state may differ from those discussed in this article. Please seek the advice of a professional for any questions related to your specific situation.

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