Prepare Your Estate for Potential Tax Changes in Texas

 Posted on July 25, 2024 in Estate Planning

As a Texas resident, you currently enjoy a favorable tax environment when it comes to inheritance. With no state inheritance tax and generous federal estate tax exemptions, you may feel little urgency to engage in extensive estate planning. However, tax laws can change, and it is wise to prepare for potential shifts. A Texas lawyer can help you with strategies to protect assets and ensure a smooth transfer of wealth to the next generation.

Current Estate Tax Situation in Texas

In 2024, Texas will not impose a state inheritance tax. At the federal level, the estate tax exemption stands at $13.61 million per individual or $27.22 million for married couples. These high thresholds mean most individuals in Texas will not need to worry about estate taxes—for now. But savvy planners know that tax laws can shift, and it is better to be prepared.

Important Strategies for Future-Proofing Estates

Estate planning is not just for the wealthy. It is a helpful step for anyone who wants to protect his or her assets and provide for his or her loved ones. While the current tax layout in Texas is favorable, it is important to think ahead and prepare for potential changes. By implementing smart strategies now, you can ensure that your legacy remains intact, regardless of how tax laws may evolve.

Exemptions Are an Ideal Tax-Free Option

One of the most effective ways to protect your estate is to take full advantage of the current exemptions. This might involve strategic gifting, where you use the annual gift tax exclusion to gradually transfer wealth to your beneficiaries without incurring gift taxes. The unlimited marital deduction enables married couples to transfer assets to each other tax-free, effectively doubling the amount protected from estate taxes.

Trusts Can Offer Flexibility

Trusts are another versatile tool in the estate planner’s arsenal. They offer flexibility and potential tax benefits tailored to your specific needs. Living trusts, for example, allow you to maintain control of your assets during your lifetime while providing a smooth transfer to beneficiaries upon your passing. For those with significant life insurance policies, an Irrevocable Life Insurance Trust (ILIT) can help keep the proceeds out of your taxable estate. Charitable Remainder Trusts and Spousal Lifetime Access Trusts (SLATs) offer additional options for managing your estate and potentially reducing your tax burden.

Review Beneficiary Designations

Regularly update beneficiary designations on life insurance policies, retirement accounts, and bank accounts. This simple step can prevent unintended consequences and keep assets out of probate court.

Consider Charitable Giving

Donating to charity can reduce taxable estates while supporting meaningful causes. Options include:

• Establishing a charitable trust or foundation
• Leaving a portion of the estate to charity in a will
• Making qualified charitable distributions from IRAs for those over 70½

Stay Informed and Flexible

Tax laws change. Regular check-ins with financial advisors and estate planning attorneys can help ensure strategies remain optimized for current laws.

Think Beyond Tax Planning

While minimizing taxes is important, estate planning serves broader purposes. It is about ensuring that your wishes are carried out after you are gone, providing for your loved ones, and avoiding potential family conflicts or legal battles. A well-designed estate plan shields your assets from potential creditors and legal challenges and establishes a clear roadmap for managing your affairs should you become incapacitated.

Consider the peace of mind that comes with knowing you have done everything possible to secure your family’s future. By addressing these issues comprehensively, you are not just planning for your legacy – you are providing a roadmap for your loved ones during what can be a challenging time.

Make Sure Your Estate is Strategically Planned With a Fort Worth, TX Estate Planning Lawyer

The best time to start estate planning is now. A solid plan can save heirs from headaches and conflicts even with favorable tax laws. Every family’s situation is unique, so working with a Fort Worth, TX estate planning attorney is crucial to create a tailored strategy. Call Gonzalez Law, PLLC at 817-349-7330 to start your free consultation.