As you focus your attention on your estate planning, one alarming aspect soon arises: there is the possibility that much of the hard-earned assets you hope to pass on to your heirs in Camden will have to go towards settling your estate’s liabilities. Even if you leave little to no debt behind, there are certain expenses that may be inherent with estate administration.
One that most who come to us here at the Law Offices of Bonnie M. Benson, P.A. seem resigned to paying is taxes. Just as it was to them, the following two pieces of information may come as music to your ears: first, Delaware does not impose a state estate tax on its residents. Second, there is a way for you to limit your federal estate tax liability.
Understanding that federal estate tax threshold
That is of your estate will be subject to taxes at all. The federal government sets an annual estate tax threshold to determine citizens’ tax exemption when it comes to this potential expense. Per the Internal Revenue Service, that amount for 2020 is $11.58 million. This high amount all but ensures that many estates will not end up owing taxes. Those that do will only owe taxes on the portion that exceeds the threshold.
Estate tax portability
Estate tax portability allows a married person to use the unused portion of their spouse’s exemption. If you plan it right, you may be able to preserve your entire exemption and then pass it on to your spouse. Simply leave them your assets upon your death (taking advantage of the unlimited marital deduction). They can then claim your unused estate tax exemption by filing an estate tax return the same fiscal year that you die.
You can find more information on estate planning strategies throughout our site.