Smart Tax Move for 2014: Forget Conventional Wisdom About Inheritance Taxes
December 11, 2013Smart Tax Move for 2014: Forget Conventional Wisdom About Inheritance Taxes
A standard tax strategy for high net-worth individuals – reducing your estate to limit inheritance tax – may no longer be the best move. Estate tax rates have fallen and income tax rates have risen, so that making gifts to lower the size of an estate could lead to bigger income tax bills down the road.
“In the past, it almost always outweighed the income tax consequences if you received an estate tax benefit, because estate tax rates were so much higher,” says Steven Eliach, JD, LLM, partner-in-charge of the Tax Practice at Marks Paneth. “But rates have changed. And other provisions of the tax code serve to reduce the income tax bill for inherited assets. “The bottom line is, don’t automatically assume that you do not need to pay the estate tax, because that may end up costing you more money.”
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