When you draft a will or other estate documents, you may wonder whether or not your loved ones will have to deal with estate taxes. This can lead to all sorts of other questions. Are you leaving your loved ones with more of a burden than a gift? Can you plan in such a way that minimizes the tax burden? What else do you need to know about estate taxes and how they will impact your family? Thankfully, you don’t have to plan your estate alone. You can get clear, concise answers to even your most complicated questions. At Balanced Taxes, we’ve been helping taxpayers make sense of their taxes since 1989. Let’s start with some of the basics of estate planning taxes, and then you can feel free to contact us at any time if you have more questions.

Estate Tax vs Inheritance Tax

People sometimes use the phrases “estate tax” and “inheritance tax” interchangeably, but these two taxes actually have distinct meanings. If you live in New York, you won’t have to worry about inheritance taxes, but a few other states do still use this term. Essentially, an estate tax is deducted from an inheritance before the beneficiaries receive it. An inheritance tax applies after the beneficiaries get their inheritance.

Estate Planning Is a Must

An estate tax is any tax on an inherited property. Your estate may or may not come with any taxes at all. The amount depends on whom you designate as your beneficiaries, how much your estate is worth, and your state’s laws. If your estate’s worth falls below a certain threshold, the government may not charge estate taxes. Certain factors like the marital deduction also come into play. For example, you can leave any part of your estate to your spouse, and that inheritance will not be taxed. If, however, you leave it to any other beneficiaries, the amount can be taxed.

With all of these different tax laws and exceptions, you can be smart about your estate planning. With the help of an expert from a tax service, you can arrange your estate in a way that minimizes the tax burden for your loved ones after they inherit the estate. A tax expert will understand your state’s laws and will help you adjust your plan as needed. Furthermore, estate planning with an expert can save you the time you might have spent researching tax laws.

Estate Taxes and More

When you start planning your estate, you need the experts on your team. At Balanced Taxes, we’re here to help you make sure that your loved ones can get the most out of their inheritance. If you’re ready to start planning, contact Balanced Taxes today.