This Checklist for Inheritance Planning Will Provide Insight
Earlier this year, a survey was conducted to gauge the preparedness of American adults in estate planning. Many of them said that they were frozen with inaction because they did not know where to begin. Many of them said that they were frozen with inaction because they did not know where to begin.
In an effort to provide a starting point, we will share a few questions that you should ask yourself when you are trying to put together an estate plan outline.
Will your estate be exposed to taxes?
Generally speaking, a direct inheritance is not considered to be taxable income by the IRS or the state tax authorities. This would apply to bequests that are distributed through the terms of a will along with insurance policy proceeds.
Distributions of the principal in a living trust would not be taxable. You would need to claim the trust’s earnings. Traditional individual retirement account beneficiaries have to pay taxes on the income. Traditional individual retirement account beneficiaries have to pay taxes on the income.
Appreciated assets get a stepped-up basis, which means that the inheritor would not pay capital gains taxes on the appreciation that accumulated during the life of the decedent.
Most of the above is good news, but there is also some bad news if you have enjoyed a significant level of financial success. The federal estate tax is applied to the portion of an inheritance that exceeds $13.61million. That rate is 40 percent.
There is no state-level estate tax in Oklahoma where we practice. State estate taxes are imposed in 12 states. You can take legal steps to reduce your exposure to taxation if your estate will be subject to taxation. We can help you understand your situation and make the right recommendations to preserve your legacy. Many elders will live in nursing homes. According to Genworth Financial, the median annual charge for a private room in an Oklahoma City area nursing home in 2024 is $97,000.
Medicare does not pay for the custodial care that nursing homes provide. Medicaid will cover the cost if you are eligible. You can use an irrevocable Medicaid Trust to position your assets in a way that will allow you to qualify for Medicaid in the future. Create a living will that outlines your preferences for life support. You can also use durable powers of attorney for health to name someone who will make medical decisions on behalf of you. If you have a trust, you can designate a trustee for disability. You can add a durable power of attorney for property to name someone to manage property that is not held by a trust.
Are your loved ones ready to handle their inheritances?
You should consider the money-management capabilities of the people on your inheritance list. Minors are unable to manage their own money. Therefore, you will need to use a custodial or trust account to facilitate the transfer of assets to minors. A trust that offers incentives can be used to encourage a person to behave positively. This is another area that you should discuss with an attorney from our firm if you have these concerns.
Schedule a consultation today!
When you get a general idea of how you want to proceed, it is time to work with an Oklahoma City inheritance planning attorney to actualize your vision. If that time is now, our doors are open.
You can schedule a consultation appointment if you call us at 405-843-6100, and you can use our contact form if you would rather send us a message.
We also have a Tulsa location, and if that one is more convenient, the number there is 918-615-2700.
After helping his own family deal with a lengthy probate and the IRS following his father’s untimely death in a farm accident, Larry Parman made a decision to help families create effective estate plans designed to reduce taxes, minimize legal interference with the transfer of assets to one’s heirs, and protect his clients’ assets from predators and creditors Read More! Our doors are open if you need us. You can schedule a consultation appointment by calling 405-843-6100. If Tulsa is more convenient, the number there is 918-615-2700.
After helping his own family deal with a lengthy probate and the IRS following his father’s untimely death in a farm accident, Larry Parman decided to help families create effective estate plans designed to reduce taxes, minimize legal interference with
