In this article, you can discover:
- What taxes you may have to pay when transferring property or assets in Texas.
- The laws you should be aware of when you are planning to transfer any property or assets in Texas.
- The role of life insurance in Texas estate planning.
What Are The Tax Implications Of Gifting Property Or Assets In Texas? Are There Specific Exemptions Or Limitations?
In Texas, you don’t have to worry about state-level gift taxes, but the federal rules still apply. For example, there is a gift tax exclusion where you can gift up to $18,000 without any tax repercussions. If you go over that limit, you have multiple options: you can either pay the tax on the extra amount or reduce your lifetime estate tax exclusion.
The lifetime estate tax exclusion would be $13,610,000 the next year. However, after 2025, this exclusion might drop to around $7 million, depending on the decisions made by Congress.
Gifting assets directly is only one of several options you have. You may also want to consider transfer on death deeds, which are especially useful for Medicaid planning, or setting up irrevocable trusts that take care of your beneficiaries while keeping your estate in check.
If you have a sizable estate, it is crucial that you think over these decisions carefully. Working with an estate planning attorney and a financial expert can save you a lot of trouble down the road.
What Laws Or Regulations Should Individuals Be Aware Of When Planning For The Transfer Of Assets In Texas?
When it comes to transferring assets in Texas, you must be mindful of who you are giving them to. Gifting or transferring assets to someone on government assistance, such as Supplemental Security Income (SSI), can compromise their benefits. Setting up an irrevocable trust is a clever move to help your loved ones without causing them financial or legal problems, especially if they are dealing with situations like bankruptcy or divorce.
Charitable gifting mainly falls under federal laws. Using charitable remainder trusts can be beneficial because you get tax breaks and a steady income stream, and your favorite charities receive a donation. Some folks even start their own non-profit organizations for causes they believe in, which is another great way to manage assets for good.
What Role Does Life Insurance Play In Estate Planning?
Life insurance in estate planning is mainly there to give your loved ones some financial breathing room when you’re gone. It can cover funeral costs and daily living expenses, and help manage complex estates. Even though life insurance payouts are not taxed as income, they do count when calculating estate taxes.
Previously, when estate taxes kicked in at much lower amounts, people used irrevocable life insurance trusts to keep their policies out of the taxable estate. Although this is no longer the case, life insurance still plays an essential role in estate planning, like boosting the value of what you leave behind. With estate planning and life insurance, it’s all about balancing the costs and benefits.
For more information on the Transfer Of Assets & Property In Texas, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (972) 366-7201 today.