They say the only two certainties in life are death and taxes. Texas is one state replete with complications that can occur involving the tax implications of a death.
Consider the case of an elderly mother who wanted to provide for her children after death. Her estate was to be distributed in equal amounts to all her children, but questions arose among the siblings regarding the high costs of legal fees to advisers, as well as a potentially large part of her estate to be taxed.
The woman’s children had estimated her liquid assets to be about $300,000 and her home at around $90,000. Taxation guidelines can be tricky, so determining what will be taxed and how her property will be distributed are best resolved sooner than later. The proposed heirs would be wise to consult with a financial planner specializing in wills, guardianships and beneficiary issues. Frequently, estate advisors are able to provide valuable input.
Unless a person already used up a lifetime cap of exorbitant gift giving, in the state of Texas, an estate valued under $5,340,000 would fall under a gift tax exclusion for each individual in question. This mother’s asset value would not be taxed under federal law. Anyone inheriting assets under that amount would not be subject to assessment on gifts or an estate.
Another piece of good news is that Texas probate is not as expensive a process as it is in other states. The issues would be slightly more complicated if the principal held properties in various states and resided in another.
It is always a good idea to confer with a professional who is dedicated to keeping up with ever-changing estate planning laws so that a love one’s final wishes regarding guardianship, heirs, beneficiaries, distribution of assets and power of attorney can be clearly spelled out in a last will and testament. This is especially crucial if the person becomes incapacitated. Medical directives to physicians and family members may be unpleasant topics, but discussing issues now will deters family squabbles later. For this reason, the mother and children in this case should turn to a reliable source to provide unbiased information to secure the future of her beneficiaries.
Source: The Dallas Morning News, “Minimize Taxes Upon Death” Trudy Turner, Jul. 10, 2014