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People decide to start preparing for death for many different reasons. Some people have personal medical challenges that they simply cannot ignore. They take action because their future health is uncertain. Others engage in estate planning out of concern for their dependent family members or a desire to control what happens to their property. Regardless of why someone creates an estate plan, they have to consider numerous details.
Taxes can be a very important consideration for those thinking about the legacy that they leave when they die. Many people still owe small amount of income taxes when they die, and their estates generally have to cover that obligation. A small subset of those who die may have estates that are may be subjected to estate taxes. Do people planning their estates in Arizona need to worry about estate taxes?
Federal taxes apply in every state
Arizona is like most other states in the country. It does not collect a state estate tax. No matter how much property someone owns when they die the Arizona government does not take a portion of their estate’s value. Unfortunately, the federal government is more than happy to do so if people don’t plan in advance. Only relatively large estates are at risk of federal estate taxes. For estates that enter the probate process in 2024, the minimum estate value for the state taxes to apply is $13.61 million.
The average person addressing their primary residence and retirement savings does not need to worry about estate taxes. However, those with investment holdings or small businesses could be at risk of a hefty tax bill after they die. The federal government lays claim to anywhere from 18 to 40% of an estate that is over the exemption threshold.
Proper planning protects people from taxes
The only way to eliminate estate tax obligations is to ensure an estate is below the federal threshold for taxes. Advance planning role in that process. Some people make gifts while they are still alive. Others add co-owners to their most valuable assets. Trusts can also help mitigate estate tax risk. Different personal situations warrant different estate planning solutions.
Discussing personal holdings and estate tax concerns at length with a skilled legal team when estate planning can help people evaluate their options for minimizing how much of their estate will eventually go to the government. Estate taxes can significantly diminish someone’s legacy if they do not plan carefully. .Contact today for a free and confidential consultation with Pennington Law, PLLC.
