Federal Estate Tax is an issue faced by wealthy Louisiana residents that forces their family to pay a nearly 50% percent tax to the government if someone has too much money when they die. Currently, single persons with over about $5.45 million and married couples with over $10.9 million dollars are subject to federal estate tax. The family must pay between 40% and 50% tax on any amounts in the estate exceeding the aforementioned limits. So the question becomes, is there any way Louisiana residents can avoid their family being forced to pay this exorbitant tax?
One option is to slowly lower the value of your estate by making gifts to as many individuals as possible to get assets out of your estate. However, when it comes to avoiding estate tax you are limited in how much you can donate to each gift recipient per year. Currently, you can donate up to $14,000 per year to as many people as you’d like to lower your taxable estate. If you are married, each spouse can give $14,000 bringing the total to $28,000 per year.
So let’s say you are married, and you have 3 kids and 9 grandkids that you’d like to start donating assets to lower your estate value because you have in excess of $10.9 million dollars in assets. Between you and your spouse, you can donate $28,000 to each of these 12 recipients. For younger grandchildren you can donate their portions to special trusts that will hold the money until they reach a certain age. With these 12 yearly gifts, you are removing $336,000 out of your taxable estate per year. The practical effect of these donations is to prevent a 40-50% tax on $336,000 with every donation made. So essentially you are saving your family between and $134,000 and $168,000 in federal estate tax payments that would be due at your passing.
To discover how to avoid estate taxes for your family and other options for lowering your taxable estate, call (504) 274-1980 in the Metairie and New Orleans Area or call (985) 246-3020 in Mandeville, Covington, Slidell, Houma, Thibodaux, and surrounding areas.