Making sure that your loved ones don’t have to spend a lot of money on estate taxes is important if you have a high-value estate. There are several things that you have to consider when you’re trying to do this.
You make decisions that propel your wishes forward. This takes advance planning, so be sure that you leave yourself time to do it. Once you start to think about your estate plan, remember that there are several components. These include the will, trusts, powers of attorney and advanced directives. Before you start on those, consider how the value of your estate may impact what your loved ones will actually walk away with.
What factors do you have to think about when spending down an estate?
There are a few points to think about when you’re gifting or spending down to reduce the value of your estate. One of these is that there are annual limits to how much you can give to a single person or entity. In 2022, this limit is $16,000 per person, per year.
You also need to consider how the spending down will affect your ability to receive needs-based services, such as Medicaid. There is a five-year lookback period that is used when a person applies for these programs.
Your estate plan must accurately represent your wishes. Taking the time to set up your estate plan to legally show these wishes is important. Working with someone who is familiar with estate planning can help you to ensure that you know your options so you can make the decisions that will benefit your loved ones after you pass away.