There are misconceptions about estate planning that commonly occur in West Virginia and in other states as well. People tend to get confused by some common untruths that can steer them in the wrong direction. Although estate planning can be a complex area of the law, it is largely straightforward and beneficial when established in accordance with some tried and proved principles.
Some people are misinformed about the tax consequences of estate planning and the creation of trusts. Trusts may offer estate tax savings, but the income tax on a living trust will be paid by the person who established the trust. There are many different tax rules that may apply in any given situation, and the individual will be best advised by consulting with an experienced estate planning attorney, along with a financial planning and tax specialist in some situations.
It is important to remember that estate taxes imposed by the federal government do not kick in except for persons who own over $5.4 million of assets at death. For a married couple, that amount can be doubled in terms of how much in assets can be protected ultimately through proper estate planning. For most middle-class persons, the specter of an estate tax will not even be a factor.
Considerable taxes can be saved by having property inherited by beneficiaries rather than sold and turned into cash assets. If one inherits property worth $100,000 from one's deceased parent, the basis for the capital gains evaluation will be $100,000 and not the $10,000 that was the original purchase price of the property. Inheritance in that instance saves the beneficiary considerable taxes by being able to compute any future capital gain based on the $100,000 basis and not a $10,000 basis. As stated, the maximum benefits of estate planning can be obtained by working with an estate planning attorney who is experienced in federal laws and in the estate laws of West Virginia.
Source: paulsvalleydailydemocrat.com, "The facts on estate planning", Feb. 22 2017