When you die, all of your property and personal liabilities become part of your estate. Before the people that you love will receive your remaining property, the representative of your estate will first have to pay off your debt and settle all of your tax obligations. They will have to use the property you leave behind when you die to handle those financial responsibilities.
For most people, probate proceedings only require a final income tax return and possibly an estate income tax payment as well if they order the sale of their property. For a smaller subset of people, estate taxes might diminish what they leave for loved ones.
Will you need to put a special plan in place to protect your family from estate taxes after you die?
New Hampshire does not assess an estate tax
The good news is that you don’t have to worry about a New Hampshire state estate tax. Although a handful of states assess taxes on the value of someone’s estate when they die, New Hampshire does not.
Of course, federal estate taxes will still apply. If your estate is worth more than $12, 060,000, your loved ones may have to pay as much as 40% of the estate’s value in taxes after you die. Gifts and trusts are two of the more popular ways for people to minimize tax liabilities on their estates. Assets transferred prior to your death and those that are not held in your name will not pass through probate court and will therefore not increase your tax liabilities.
There could be other tax concerns as well
Even if you are confident that your estate will fall well under the multi-million dollar threshold for federal estate taxes, you may have to address estate income taxes or even the possibility of capital gains taxes for your beneficiaries in your estate plan.
Using the right legal methods to transfer ownership can go a long way toward reducing the tax obligations that your loved ones have when they inherit property from your estate. Employing the right estate planning tactics will maximize the positive impact of your legacy on the people you love.