Estate Planning Tips Everyone Should Know, Darra Rayndon of Clark Hill Explains

Estate planning is something everyone needs to think about, and it’s never too early to start. Darra Rayndon, a member of Clark Hill PLC, Scottsdale, Arizona, is an estate planning and taxation expert. In this report, she provides some planning tips that will be of value to everyone.

Darra Rayndon

Darra Rayndon

Rayndon points out that everyone needs an estate plan, and it needs to be customized to fit each person’s situation. Some people will have taxable estates; some won’t. Some people will have children; some won’t. No single plan will fit all situations.

Rayndon says that the first consideration in planning an estate is deciding where the estate will be distributed. Another matter to be considered is asset protection—making sure that unknown creditors aren’t able to reach certain assets. The third big thing to think about is taxation issues.

There are three federal taxes that need to be kept in mind: income tax, estate tax, and a generation-skipping tax (one that many people are unaware of). Rayndon says that the estate tax situation has changed a bit at the first of the year. In 2016, an estate less than $5,450,000 is not subject to estate tax. A married couple that plans properly can leave an estate of $10,900,000 free of estate tax.

Couples with more modest assets will never need to worry about estate tax. The generation-skipping tax has the same exemption dollar amounts. For couples with substantial assets, these numbers are very important. That’s because estate tax, if it comes into play, takes 40% of the estate subject to taxation. A tax bill that large is worth some planning effort.

Rayndon explains that the estate tax is just what it says: a tax on the estate of a deceased person. The tax is not imposed on beneficiaries. One exception to this rule could occur when a beneficiary takes out assets from an IRA, for example, and those assets might be subject to taxation. With estate tax, the estate pays the tax and then distributes the assets to beneficiaries free of any federal tax (again, with the exception of certain specific kinds of assets. Some states have an inheritance tax, and such taxes are on the beneficiaries. Very few states have such taxes, however.

Once someone has a basic estate plan in place, whether through a will or a revocable living trust, it may be time to look at planning for the various types of taxes Rayndon has mentioned. There are a number of planning tools that can help people minimize the burden of taxes on their estates. People who have tax issues like this need to work with a skilled taxation and estate planning practitioner to learn what can be done.

Darra L. Rayndon, a Member in Clark Hill’s Estate Planning & Probate Practice Group, has over thirty years of practice experience and is certified as a tax specialist by the Arizona Bar. Darra’s work includes tax planning, business entity formation and representation including corporations, partnerships, limited liability companies, and other businesses, estate and wealth succession planning, asset protection, exempt private offerings, and real estate matters. She is also a Certified Fiduciary through the Arizona Supreme Court, and as such, serves as trustee and in other fiduciary capacities when called upon. The Legal Broadcast Network is a featured network of Sequence Media Group.