Effective wealth planning is essential if you want to preserve your wealth for your children. Be careful not to make this common home planning mistake if you want to pay unnecessary additional property taxes (death tax) to the IRS and state tax authorities, thereby reducing your children's inheritance.
You will be pleased to know that this costly mistake can be easily avoided with proper estate planning.
Image Source: Google
Failure to recognize the significance of the State estate tax law
Many states have their property taxes (death taxes), and most of them have "separated" their property taxes from federal property taxes, meaning your property may be subject to state property taxes even if no federal property taxes are due.
You will need to review your current financial situation to determine your state's potential property tax burden and learn how to minimize it.
Misunderstanding the new Federal estate tax law
Many breathed a sigh of relief when President Obama signed the Tax Break, Unemployment Insurance, and Job Creation Act of 2010 into law. They believed that the death tax was effectively abolished for all but the very rich.
Although federal tax laws have been temporarily revised, many states still have property tax exemptions as low as $1,000,000, without the "portability" of unused property tax exemptions between spouses. You can't ignore tax planning if you want to minimize or avoid state property taxes.