April 29, 2016
It's easy to get caught up in the day-to-day demands of life — from running a business or managing investments to balancing work, family and play — and all too easy to put off longer-term needs such as estate planning. But failing to make difficult financial decisions now can affect your survivors long after you’re gone. Thinking long term can help your survivors avoid many challenges, including a tax bill that they might have to settle, which may mean quickly selling off property or unwinding the family business.
For 2016, the federal estate tax exemption is $5.45 million per individual or $10.9 million for a married couple. Anything above that threshold will be taxed. Additionally, some states levy their own estate or inheritance taxes — anywhere from 15 to 20 percent. Families are often surprised to learn that tax is due within nine months of a death.
“Some advisors tend to just look at the numbers and say, for instance, ‘You’re worth $15 million, and the exemption is $10 million, so the taxes will be $2 million, and your kids will get $13 million,’” says John Melvin, Wealth Management Consultant for The Private Client Reserve in Kansas City, Kansas.