Inheritance Tax

Oklahoma City Estate Planning Attorney

Today, only a few states impose an inheritance tax on a deceased person's property; however, Oklahoma is not one of them. In recent years the state and federal estate taxes have been volatile, but since the passage of the American Taxpayer Relief Act of 2013, the laws have stabilized. Due to the fact that Oklahoma, similar to the majority of the U.S. doesn't impose an inheritance tax or a state estate tax, it is the federal estate tax that gets more attention.

The federal estate tax only affects the richest families in America. Effective January 1, 2013, every person has the right to leave or give away up to $5.25 million without owning any estate tax. This means that approximately 99.5% of all estates will not owe any federal gift/estate tax.

One attractive feature of the federal estate tax law is that spouses are allowed to combined tax exemptions, thereby allowing married couples to give away or leave over $10 million without owing taxes. This new feature, called "portability" by tax experts, is not only favorable, but permanent. For example, if the first spouse passes away but fails to use up his or her individual gift/estate tax exemption, the surviving spouse is entitled to use what's left, which affords the couple the greatest tax benefit. This gives the couple a total $10.5 million exemption.

  • In order to take full advantage of the portability rule, an estate tax return will need to be filed when the first spouse dies, even if they don't owe any taxes. This means that the IRS will have to process returns, despite the fact that they don't provide any tax revenue, and tax payers will need to enlist the help of tax experts in order to prepare these complex tax returns; however, in the end it's worth the tax savings.
  • On large estates that are subject to the federal estate tax, the gift/estate tax rate is currently 40%, which is an increase over the 35% that was in effect in 2012. This rate also applies to generation-skipping transfer tax, which is a federal tax imposed on large transfers that skip generations; for example, from a grandparent to a grandchild in an attempt to avoid estate taxes.

Saving Taxes With Proper Planning

For wealthy individuals with large estates, they benefit dramatically by implementing a variety of advanced estate planning techniques such as dynasty trusts, using the portability provision for married couples, and making annual tax-free gifts among other advanced planning tools and techniques.

If you are concerned that the federal estate tax will affect your estate and wish to implement wealth preserving, tax-saving strategies to maximize your estate, please contact Oklahoma City estate planning attorney Elizabeth A. Richards. With over 25 years of experience establishing legally sound financial plans on behalf of her clients, she is well-qualified to help you achieve your advanced estate planning goals.

Contact our firm today to obtain additional information; we can be reached at (405) 788-4662.

Elizabeth A. Richards

Attorney at Law

Elizabeth A. Richards Attorney at Law - Oklahoma City Probate Lawyer
Located at 112 West Commerce Street Oklahoma City, OK 73109. View Map
Phone: (405) 788-4662
Local Phone: (405) 319-9696.
Website:
Probate.com

The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.

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(405) 788-4662