There is one subject that can put a damper on estate planning: the concept of taxes. Estate taxes vary significantly from one state to the next, so you need to be certain you understand what you need to do when you live in Massachusetts.
As you plan your estate, there are various actions you can take to pay as little as possible. You certainly want your loved ones to have as many of the assets you give them without giving too much to the state. People creating estate plans will naturally have many of these questions, and here are a few of the most common ones.
1. What methods can you utilize to reduce estate taxes?
There is a significant deduction people can utilize as long as they have a spouse: a marital deduction. Any asset a person bestows upon the spouse does not receive the same taxation as other assets. These assets are not eligible for taxation, so leaving as many of them to the spouse as possible can help substantially.
2. Can you reduce estate taxes by leaving money to charities?
Many people use their estate plans to state their desire to leave money to various charities they care about. Any gifts you end up leaving to charity are tax-deductible. However, before leaving money to a charity, you need to make sure that organization has received such recognition from the government. Not all charities that claim to be charities can receive such tax deductions.
3. What assets lack eligibility to be part of the gross estate?
You may believe you have ownership over certain items, but that is not always the case. In the event you received a lifetime gift you no longer maintain control over, then it is not part of your estate. Additionally, items your spouse owns cannot be part of your own estate plan, and you cannot gift such items to others.