As we move into 2023, there is some good news for those who are planning their estates: the estate tax exemption amount is going up. This change will make it easier for people to pass on their wealth to their loved ones without having to worry about paying excessive taxes. Below, the trusted estate planning attorneys at Lauenstein discuss what this means for your estate planning needs.
What is the Estate Tax Exemption?
Estate taxes are a tax imposed on the value of an estate after a person dies. It applies to all assets owned by the deceased, including real estate, investments, and personal property, and can be as high as 40%, which can significantly reduce the amount of wealth passed on to heirs.
The estate tax exemption amount is the amount of a person’s estate that is exempt from the estate tax. In other words, it’s the amount of money that a person can pass on to their heirs without being subject to the estate tax. For example, if the estate tax exemption amount is $5 million, and a person’s estate is worth $4 million, their heirs would not owe any estate tax.
What is Changing in 2023?
The federal estate tax exemption amount is going up from $12.06 million in 2022 to $12.92 million in 2023. This means that people can now pass on more of their wealth to their heirs without being subject to estate tax. For those who have larger estates, this change to estate and gift taxes can mean significant savings in estate taxes.
It’s important to note that estate tax laws can be complicated and can vary from state to state. The Maryland state estate tax exemption remains $5 million for 2023. Working with an estate planning attorney can help ensure that your estate plan is structured in a way that maximizes the benefits of the estate tax exemption while minimizing any potential tax liability.
How Can You Minimize Estate Taxes?
In addition to the estate tax exemption, there are a number of tools that can be used to minimize the tax burden on your estate, including:
- Using trusts to reduce estate taxes
- Transfer assets to beneficiaries
- Gifting assets
- Making charitable donations
Trusts can be used to hold assets, such as stocks and real estate, and can be used to protect these assets from estate taxes. They can also be used to transfer assets to beneficiaries at a reduced rate.
Charitable donations can also be a powerful estate planning tool, as they can reduce the value of an estate while providing support for causes that are important to the deceased. An experienced estate planning attorney can help you come up with a plan to ensure your wealth is protected.
The estate tax exemption amount going up for 2023 is good news for anyone who is planning their estate. This change means that people can pass on more of their wealth to their loved ones without being subject to the estate tax. However, estate planning can be complex, and it’s essential to work with an experienced attorney to ensure that your estate plan is structured in a way that minimizes your tax liability and maximizes the benefits of the estate tax exemption.
Contact Douglas Lauenstein For Your Baltimore County Estate Tax Attorney Needs Today
Our team of trust experts will work with you to design an estate plan that is both comprehensive and suited to your individual needs. Douglas C. Lauenstein, a Baltimore County attorney with decades of experience, is here to help you. To learn more about our services and the estate planning process contact us to get in touch with an estate planning lawyer today.