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Many people wonder whether their heirs will be able to receive the full benefit of their status as beneficiaries in wills and if there are alternative estate planning options that can help to limit their tax liability. Only a small percentage of estates in Houston are subject to taxation since the State does not collect an estate tax. However, for estates of a certain value, the federal estate tax may still apply.

The concept of estate tax in Houston probate cases is always something that you need to keep at the forefront of your mind when creating these documents. Our knowledgeable attorneys could help determine your estate’s potential tax liability and work to minimize the impact of taxation on your heirs.

Does Texas Have an Estate Tax?

Houston is located in one of the 38 states that no longer levy an estate tax upon a person’s death. This means that the State will never seize a portion of an estate, and heirs named in a will or those who inherit through the application of the intestacy statute will receive the maximum possible benefit.

Testators do not need to include provisions in their wills to trigger this benefit since there is no estate tax law on the books. This applies to heirs named in wills regardless of their current place of residence. As long as the will enters probate in a state court, the State will not seize any portion of the estate.

Federal Estate Tax

While there is no state estate tax that applies to probate in Houston, the IRS may still take a portion of an estate through the federal estate tax. The federal estate tax says that estates with a value in excess of $12,060,000 must pay a portion of the value off the top of the estate to the federal government.

As of 2022, the government will seize a portion of the value of the estate in excess of the $12,060,000 threshold. This may be as little as 18 percent or as much as 40 percent of this excess value. Our well-practiced team could help estate planners to better understand the impact of the estate tax in Houston probate cases.

Crafting Estate Plans that Limit the Impact of the Federal Estate Tax

The federal estate tax applies to the value of a person’s holdings upon death. Whether or not an estate may pay taxes depends upon the value of the estate when it enters probate. Accordingly, one way to avoid these payments is to reduce the value of an estate prior to a person’s death.

A common way to accomplish this is to create a trust. Property that sits in a trust is not part of a person’s estate in the probate process. Even so, a trust can mandate the distribution of property upon the trust maker’s death in much the same way as a will. As a result, having the foresight to create a trust could help limit the portion of an estate that would be lost to federal estate taxes.

Discuss the Estate Tax in Probate Cases with a Houston Attorney

Houston is in a state that does not levy an estate tax. However, the federal estate tax still applies to estates with a value in excess of $12.06 million. The executor of an estate must pay these taxes prior to the distribution of estate assets to heirs.

Our dedicated attorneys could help you to avoid the impact of these taxes. This can include using estate planning tools that help to limit your estate’s value upon your death. Reach out to Hegwood Law Group today to discover more about estate tax in Houston probate cases.

Hegwood Law Group

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