Thinking about passing on your estate to your children or grandchildren?
You best cross your “t”s and dot your “i”s.
If you are thinking about passing on your estate, you have probably heard rumors about taxes. But what do they mean for you and your family?
Here, we will dive into 5 fascinating facts about estate taxes so you have a better idea of what to expect.
South Carolina Is an Ideal State to Pass Away In
Estate taxes vary from state to state. Some states enforce estate taxes, although the amounts change. Others do not enforce them at all.
South Carolina is one of the states that does not impose either estate or inheritance taxes. Prior to 2005, the state had a “sponge tax” which took a portion of estate taxes given to the federal government.
Now, however, the state does not impose any “death” tax.
Other citizens are not so lucky and must pay careful attention to tax laws. Regardless of how carefully individuals have drawn up a will, inheritors may face stiff taxes depending upon location.
Estate Taxes Do Not Apply to Most Americans
Put your fears to bed: the estate tax does not affect most Americans. In fact, you must be in the wealthiest tier of citizens to experience the tax.
Prior to 2017, only 2 in 1,000 estates faced a tax. That number fell to 1 in 1,000 after exemptions doubled.
More than likely, the estate tax will not affect you or your family. Of course, that does not mean you should not partake in estate planning.
Many Families Might Be Shocked in 2025
In 2025, exemption rates will drop to half what they are now, affecting estates worth approximately $5.5 million per individual.
Because the rates increased recently, many families assume the tax will not ever apply to them. The change may come as a nasty shock to many.
This, again, is why estate planning is so important. Changes in tax laws mean individuals should update wills regularly, otherwise they may find themselves in a similar situation as actor Philip Seymour Hoffman’s family.
Hoffman left his estate to his only child at the time he drafted his will but failed to update it after tax laws changed and he had additional children. Consequently, his wife and remaining children suffered.
Other Countries Tax More
America has an estate tax rate at 40%. Does that sound steep? Not compared to some other countries.
Japan has the highest rate of all at 55%. South Korea follows with 50% and France comes in third with 45%.
America falls fourth in line when determining which countries have the highest estate taxes.
It Is Nothing New
The estate tax has existed for centuries. In fact, it was common during the medieval era.
During this period, kings demanded payment in the forms of “reliefs” from heirs who received property. It was from this notion that many European countries created the idea of inheritance and estate taxes.
Protect Your Family’s Future
Estate taxes may not concern you. However, it is important to understand the changing laws regarding wills, property and more so that your family is secure.
Changes in your personal life as well as in the government may have unforeseen results, which is why our professionals are available to help. We will ensure your family is protected from these changes, and we will work to create an estate plan that reflects your legacy.
Call us today to discuss strategies and to secure your family’s future.