Your estate planning choices could impact the inheritance tax for your heirs.
Family is important to you.
This includes extended family.
Maybe you have no children or spouse of your own.
Maybe you just want to leave some of your assets to family members like your nieces and nephews.
According to a recent nj.com article titled “Dividing and conquering the inheritance tax” your generousity could also cost your chosen beneficiary in inheritance taxes.
Those who do not meet the outlined criteria would be subject to an inheritance tax.
This is the case in states like New Jersey where immediate family is not exempt.
In that state, nieces and nephews would be taxed at 15 percent on their inheritance—unless the inheritance is less than $500.
What if it is at or greater than $500?
They will pay the full tax.
What if you pass it through a retirement account rather than through your will?
Are there exceptions?
Life insurance is one.
If you make a niece or nephew the beneficiary of your policy, no inheritance tax will be owed.
You will especially want to be mindful about leaving non-liquid assets.
The heir must pay the inheritance tax within eight months of the day you die.
If you leave them real estate, they may have to sell it to pay the tax.
This would be sad, yes?
One work around would be to have add a provision to your will directing any inheritance taxes to be paid by your estate.
You would need to ensure that there is enough money in your estate to cover these taxes.
Creating an estate plan to meet your goals and satisfy the law is no easy task.
Fortunately, neither Kansas nor Missouri has a state estate tax or an inheritance tax.
Work with an experienced estate planning attorney to help you do this.
So, how do you find an "experienced" estate planning attorney?
First, ask around. Friends, family and other professional advisors are trustworthy sources.
Second, conduct an "organic" search on "Google" for "estate planning" near you (e.g., "Estate Planning Anytown MoKan").
Third, either way, verify! Check out the education, experience, ratings and client reviews of any attorney before you contact him or her.
In fact, I use both of these services to thoroughly vett attorneys before referring members of our "client" family for legal help in other areas of law or for matters in jurisdictions outside Kansas or Missouri.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: nj.com (January 19, 2018) “Dividing and conquering the inheritance tax”