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Early estate planning can seek to avoid taxes

Estate planning is important for every Nevada resident, no matter the size of one's estate. There are even more reasons to plan and periodically review for people who have significant assets. Early estate planning can help protect beneficiaries from having to pay large amounts of taxes at the time of death, and a review of plans already in place can ensure the opportunity to take advantage of changing laws and circumstances.

Among the strategies recommended for consideration by wealthy people is the mega gift, according to reports. These are gifts made during a lifetime that can amount to $5 million under today's laws. Under the combined taxable estate and gift tax, it is not until this large amount is reached that a tax liability is triggered.

The law is currently set to change at the end of this calendar year. Beginning in 2013, the combined tax is scheduled to be lowered to a new limit of $1 million. This potential change in the taxable estate amount could create a situation in which a beneficiary would have to pay taxes on what were previously nontaxable gifts.

This complicated arena of estate planning can pose challenges to even the most sophisticated person. But careful consideration of gift strategies and trusts designed to limit the tax liability of a person's heirs may be just what the doctor ordered. These tools, when executed correctly, can be a great benefit to an estate and to those who stand to inherit.

Whether an estate is large or small, a Nevada resident would do well to determine the exact amount of assets intended for inclusion in an estate plan. After this preliminary research and documentation, a complete review of all planning tools may be helpful. In doing so, plans can be put in place that maximize the potential estate while limiting taxes and potential liabilities.

Source: Forbes, "Should Threat of Clawback Discourage 2012 Mega Gifts ?," Peter J. Reilly, March 13, 2012

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