Do You Need A Tax Attorney For Estate Planning?
Video Transcript
Ray Hrdlicka – Host – Attorneys.Media
We’ve talked about taxable issues here.
Do people need a tax attorney involved with their estate planning, or is that kind of inclusive?
Andrew Dósa – Estate Planning Attorney – Tacoma WA and Oakland, CA
Well, the answer is most people don’t need a tax attorney.
But if there are tax questions, I usually just advise clients to speak with their CPA, and the CPA will know enough to address those situations.
But let’s talk about estate taxes or estate issues. The federal government has changed the rules. The legislature changes it all the time. And right now, an individual can have multiple millions of dollars before there’s any estate tax.
If you have couples, then you put the two together and just make sure your trust addresses it so that you manage that well enough to avoid estate tax.
Washington is one of the relatively few states that does have an estate tax, so you want to do some estate tax planning. A CPA in Washington would probably make sure that you understood what the tax consequences were.
In California, there’s no estate tax, so we just rely on what the federal government puts in place. So, for the vast majority of people in California, they’ll never worry about estate tax. In Washington, you might have to. It’s past the $2,000,000 mark.
So the scenario is this: Let’s suppose that a couple has a $3 million estate. Let’s say $4 million, right?
Neither one of them has an estate tax consequence when one of them passes away. But what typically happens is when one passes away, all those assets automatically go to the surviving spouse.
Now the surviving spouse has $4 million, and the estate tax is going to be applicable in Washington for that individual and wouldn’t have been for the two of them individually if they’d created things.
So what you do is you put together a trust that will provide that, on the death of one, there’s a split of the assets. So the $4 million goes $2 million into one trust and the other $2 million goes into a second trust, so that when the second person dies, they still only have $2 million attributed to them, and that saves them all the estate tax.
That’s one other virtue to a trust. There may be some tax benefits, but it’s relatively infrequent.
You have to have a relatively substantial asset or portfolio to be in a situation where you need to worry about a tax consequence for you with your trust.
Law Offices of Andrew Dosa – Estate Planning Attorney
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