As we mentioned in our blog post on Dec. 21, 2012 ("The estate and gift tax exemptions are going up. What does it mean?"), many readers in Nevada are aware that the estate tax is set to change when the calendar year rolls over to 2013 unless Congress takes action. In fact, this may be one of the driving factors for some in our state to consider estate planning. Many people, one report says, are beginning to look to tools available to assist them with getting hit too hard by this tax increase.
By using estate planning tools such as wills and trusts, readers in Nevada can limit the impact of the scheduled estate tax increase. Some of the ways that people can achieve such a goal include gifting a portion of their estate to heirs and beneficiaries while they are still alive. These gifts will not only offer the benefit of seeing the joy that the gift brings to the person receiving it, but also reducing the value of a person's estate. This reduction may mean lower estate taxes in some cases.
Others in our state and elsewhere have found that they can reduce the value of their estate using estate planning tools such as a trust. With a trust, a portion of an estate can be removed and placed under the control of the trustee. This estate planning method may have benefits to some individuals, though in some cases monies can be made unavailable to a person while still alive. For that reason, individuals may wish to ensure that they understand the rules regarding such an action before creating this type of an instrument.
Estate planning can appear complicated to some in our state. Because there are many options that are available to achieve goals such as a reduction in estate taxes, a full review of estate planning methods may benefit a person. With the estate tax set to change from having an exemption of $5 million for an individual to $1 million, many may find it necessary to consider these options.
Source: southwestfarmspress.com, "Estate planning best way to mitigate rising tax," Dec. 19, 2012