Estate planning is supposed to make life easier for loved ones, but tax missteps can turn a well-meaning plan into a costly burden. Many people don’t realize how small errors can trigger major tax consequences, reducing inheritances and causing legal headaches. A skilled probate lawyer in Huntsville can help uncover these hidden pitfalls before they create financial trouble.
Overlooked Capital Gains Taxes That Can Shrink Your Heirs’ Inheritance
Capital gains taxes are often forgotten when passing assets to heirs, but they can take a surprising chunk out of an inheritance. Many people assume their loved ones will inherit property tax-free, but that’s not always the case. How and when an asset is transferred can determine whether heirs face minimal tax consequences or get stuck with a hefty bill.
For example, gifting property during one’s lifetime may seem like a generous move, but it also transfers the original purchase price (or “cost basis”) to the recipient. If the property has significantly appreciated in value, the heir could be responsible for substantial capital gains taxes when selling it. A smarter approach is often to let the asset pass through an estate, where heirs can benefit from a “step-up in basis,” resetting the value to its worth at the time of death. A probate attorney in Huntsville AL can ensure assets are structured to minimize taxes, preventing unexpected financial burdens for beneficiaries.
How Poorly Structured Trusts Lead to Unexpected IRS Scrutiny
Trusts can be excellent estate planning tools, but only when … Read More
