While Texas does not assess its own estate or death taxes, Texas residents who have especially high-value estates can still anticipate having their estates taxed after their deaths, which can substantially reduce what they are able to leave behind for loved ones. At Pakis, Giotes, Page & Burleson, P.C., we recognize that the overall value of your estate will ultimately determine whether it is subject to estate tax. However, if it is valuable enough to meet the criteria for estate taxation, there are some efforts you can make now to reduce the amount your beneficiaries will lose to taxes.
Per U.S. News & World Report, the federal government can potentially take as much as 40% of your estate for estate taxes. While some people with considerable wealth care little about reducing estate taxes, figuring that they will no longer be around anyway by the time the government assesses them, others wish to reduce them so they can leave as much of their wealth behind for their beneficiaries as possible.
If you list yourself among those looking to maximize how much of their legacy they can leave behind for family members or other loved ones, consider taking action now to lower the amount your loved ones will lose to taxes. You may want to, for example, purchase an additional life insurance policy that will cover the tax bill once you pass on. If you choose to go this route, though, be sure to buy the policy using an irrevocable life insurance trust to avoid having it add to the value of your estate.
Another way to reduce your estate tax obligations is to simply reduce the value of your estate. The less you have in there, the less they can tax you, so you may want to start giving some of the wealth you have amassed away now, or over the next number of years, while you are still around to do so. You can find out more about estate planning on our webpage.