Traditionally, the federal estate tax was extremely burdensome to wealthier individuals, and the bulk of estate planning involved finding ways to minimize this federal tax.
In the last few years, though, the federal estate tax rates and exemption amounts have changed and become much less of a problem. On the other hand, federal income taxes, capital gains taxes and other investment taxes have gone way up. And many states have increased their income, estate and inheritance taxes.
As a result, these days smart estate planning involves looking at all the different possible taxes that heirs might be facing, and figuring out how best to reduce the overall tax burden.
Here’s one example: Let’s say Linda owns some stock that she bought years ago for $30,000, and it’s now worth $100,000. She thinks it will continue to increase in value, and at some point she wants it to go to Adam. [Read more…]