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Tapping Into Estate Planning To Minimize Taxes In Nevada

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Tapping Into Estate Planning To Minimize Taxes In Nevada Lawyer, Las Vegas City

Many people are surprised to learn about the potential tax consequences that could affect their loved ones after they pass away. In this article, we unpack leveraging estate planning to minimize taxes in Nevada, including:

  • The basics of tax liability,
  • A common and effective tax-minimizing estate planning strategy, and
  • When to begin considering tax-minimizing estate planning.

What Are Potential Tax Consequences That Could Affect My Loved Ones After I Pass Away?

Most people know the existence of estate tax and its limits – currently, more than $20 million for a married couple. However, it is extremely easy for those who own businesses or have substantial land or property to reach the estate tax threshold quickly. In these cases, the IRS demands that its share be paid within six months after the owner’s death. This can lead to family businesses being forced to either sell or leverage their business at a lower rate to pay the taxes, which is an unappealing prospect for most people due to its negative impact on their employees and wealth.

What Tax Liability Should I Worry About After I Pass Away?

The estate tax is perhaps the most significant tax liability to consider, as it imposes taxation on assets upon their transfer at the time of the owner’s death. With a high tax rate of 40%, any value exceeding the current estate tax threshold of $12.92 million for an individual or $25.84 million for a married couple is subject to it.

How May Tax Liability Affect My Heirs And Beneficiaries?

As a small business owner, you may expect your heirs and beneficiaries to receive your business in its entirety. However, if the government demands 40% of its value as tax, they may be forced to either sell the business or take on significant debt to meet the tax obligation.

What Does Tax-Minimizing Estate Planning Entail?

The primary goal of estate planning to minimize taxes in Nevada is to reduce the overall value of your estate to a level that will not negatively affect your business during the transfer process, if not below the threshold outright. You can employ several strategies that range in complexity to minimize taxes on your estate.

Perhaps the most common approach is to establish a family-limited partnership. Doing so places the business into a partnership where you retain control of the business as the family head. At the same time, you divest yourself of particular economic interests.

This strategy allows you to use up your lifetime exemption while the value of the business is still low, ensuring that taxes are paid upon your death. This solution is simple, effective, and legally sound. You would adopt this approach if you know your business will have a major event in a few years or if the business is growing exponentially and you are already thinking ahead about your eventual death.

Other strategies exist and can be explored in greater detail in a consultation.

What Are The Benefits Of Tax-Minimizing Estate Planning?

Estate planning to minimize taxes in Nevada reduces the amount of tax you need to pay, thereby preserving your business intact.

When Should I Begin Considering Tax-Minimizing Estate Planning?

It is crucial that you consider estate planning as soon as your assets approach the estate tax threshold of $12.9 million. This is especially important if you own a business or have life insurance policies, as they may easily exceed the threshold.

It is worth noting that the estate tax threshold is a contentious issue in Congress and can change at any given moment. A reduction in the threshold can significantly impact individuals with a successful business. Therefore, it is essential to have a solid plan in place for business transition. Even if you plan to spend the assets or give them away before death, it is vital to consider and plan for the business transition as soon as it becomes successful.

For more information on Estate Planning To Minimize Taxes In Nevada, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (702) 703-1540 today.

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