Probate and Estate Planning: Avoiding Tax

At this time of year, as tax season is in full swing, coupled with recent media events regarding the issues of probates and Wills, many Americans are beginning to re-examine the issues to be addressed as part of an estate planning process. For many, establishing funeral and burial wishes, and provided for financing of such, is just as important as allocating monies to various parties in such a way so as to avoid paying needless estate tax to the Internal Revenue Service.

With gift and estate taxes reaching thresholds of upwards to 55 percent, many Americans are continuing on this never ending process to donate monies to charitable causes, both before and after death, to ensure dollars are not lost to the Internal Revenue Service. Through contributions made both before death and after death, estate tax can be minimized.

For individuals preparing an estate plan, consider donating monies, before, or at the time of your death, to the medical expenses of a loved one. Under the estate tax guidelines, such donations of monies are considered exempt from taxes provided the monies are paid directly to the organization in which the expense is incurred. For example, should an individual, involved in estate planning, have a loved one suffering with Alzheimer's, the individual preparing an estate plan may wish to bequeath money to the facility or organization who will be responsible for the daily care of the loved one, suffering with Alzheimer's, who may be left behind. To qualify for this estate tax exemption, the monies donated should be specifically declared in the Will with the payment issued directly to the facility of care.