Can a will reduce estate taxes?
A Will alone does not necessarily reduce Federal Estate Tax. However, as such taxes begin at 37% and reach 45% in 2007–2009, and are the highest in the federal tax arsenal, estate planning can often take advantage of tax avoidance techniques that would not be available to your family if you die without a Will. Unless you want to make Uncle Sam a major beneficiary of your estate, you’ll want to have at least a Will.
A Will alone usually doesnt have much effect on estate taxes. There are several kinds of taxes that might apply to an estate or inheritance. Theres the Federal Estate Tax, which applies to estates over $2 million in 2008 and over $3.5 million in 2009. In 2010 the tax is repealed and then reinstated in 2011 for estates over $1 million. Congress could change this, and many experts expect it to do so. This means its very difficult at the moment to predict when this federal tax will apply to an estate. There are also now estate taxes at the state level, and you have to know your states requirements and the size of estate a state tax will apply to. A few states also have inheritance tax. This is usually applied to all the property in an estate, no matter what size the estate is, and also to all real property located in the state, even if the Will is being probated somewhere else. The estate planning techniques used to avoid estate taxes usually involve transferring property to Trusts so tha
