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An estate tax is imposed on transfers of assets after death, while a gift tax is on asset transfers during life. Federal law dictates amounts and exemptions, while many states have also opted to impose an estate or inheritance tax. Estate tax is typically only imposed on a higher-value estate, but be aware as your assets can add up quickly. Also note, if your heirs opt to sell off your property or business at a profit, they may incur a capital gains tax.
A tax advisor will be able to guide you through the current tax laws, so you can best allocate your estate to your heirs. For more valuable information on estate taxation, please review the following links:
Contrary to common misconception, a will and a living trust are not the same. Put simply, a will covers your medical wishes, directives and power of attorney, while a living trust deals with your financial affairs and assets. A thorough estate plan contains both legal documents, but you should understand the purpose and the possible limitations of each.
Living trusts may be more appropriate for individuals of a more advanced age who have built a certain amount of wealth, while a will is something most adults should have in place. Understand, even if you allocate assets through a will, the assets will still have to go through probate—a legal process to validate your will—whereas with a living trust that process could be avoided.
Please click on the following links for more information about these important documents and their nuances.