Estate Planning: What You Need to Know

Estate planning refers to preparing a set of instructions on how a person's assets and properties will be managed if they are unable to take care of themselves in the course of life. Besides, the instructions outline how properties are to be managed after the death of someone. The main aim is to protect the people you care about, including your family and the social courses and charities you want to support. 

Question 1 

Individuals have the right to transfer their assets after death. However, this property may also be taxed, and this is based on the size of the estate. For instance, based on the amount received by the beneficiary, an inheritance tax is levied. While estate tax has been enacted, the inheritance tax applies to every estate 

Question 2 

The estate includes every asset that a person owns, and if that person dies, it includes everything that they owned at the time of death. For jointly owned assets, one receives only half of all owned assets upon the death of a spouse. Besides, the estate is not the entire property owned but the amount of interest owned by the time of death. When one of the couples dies, only the percentage of what the deceased person owned is inherited by their heirs, which means that after death, the heirs receive only a fraction of those assets. 

Question 3 

For assets inherited by the surviving spouse, there is an exemption of estate tax, and hence the spouse can inherit all of the assets without taxation. However, in case of the demise of the surviving spouse, the beneficiaries pay estate tax if the estate exceeds the exclusion limit, which is $11 million for a couple and $5.49 million for an individual. If a state escapes federal tax, it can still be charged for a tax by the state in which diseased was living by the time of his death, for an amount up to $1 million. 

Question 4 

The gross estate is the number of assets one owns, including investment accounts, banking accounts, and real estate. Only 50% of bank accounts are included if the account is in joint names with survivorship rights. Therefore, the beneficiaries will not inherit 100% of the estate. The adjusted gross estate is the portion of an estate that remains after various deductions such as casualty loss, funeral expense, creditor's claim, and administrative expenses. It is this amount that is used to compute estate tax. It may also refer to the amount deliberate to be passed to the marital trust. Therefore, the beneficiaries.