You may attempt to employ legitimate tax avoidance strategies when managing your income, yet when it comes to mapping out your estate plans, you may have already resigned yourself to the inevitably of having the assets you leave behind for your beneficiaries taxed. The thought of this can be frustrating, especially given all of the efforts you put into accumulating assets throughout your life in Manassas. Yet could it possible to use strategy to limit your potential estate tax liability as well?
Before considering that question, you should first understand whether or not your estate will be subject to tax at all. According to the Internal Revenue Service, the estate tax threshold for 2020 is $11.58 million. What this means is that as long as the total taxable value of your estate is less than that amount, your assets will not be taxed. Having such a high threshold ensures that very few estates actually end up owing taxes (Tennessee does not have its own state estate tax).
You may even be able to protect more than the threshold amount from estate taxes. That amount is viewed as an exemption, and any unused portion of your exemption can be used by your spouse. If you choose to leave your spouse your entire estate, such a gift can actually be given using the unlimited marital deduction (thus preserving the entire amount of your estate tax exemption).
Your spouse can then claim your entire exemption through a process known as estate tax portability (to do this, they must file an estate tax return claiming portability within nine months of your death). That amount (combined with their own exemption) allows you to protect as much as $23.16 million for the benefit of your future generations.
