What is the death tax? | JMV Law Group
What is the death tax can I minimize the effect of the death tax through estate planning?
The death tax is a tax imposed by the federal government and by certain state governments that taxes the transfer of wealth from one generation to the next. Generally, there's an exemption for the estate tax, which is currently in the year 2019, $11.4 million per person. Anything above that is subject to a 40% tax rate. On January 1, 2026, that $11.4 million gets reduce by $5 million, lowering the exemption amount. So, it's better to use it or lose it.
How do you minimize or avoid the estate tax, the inheritance tax, death tax is to transfer those assets out of your estate now and allow the future growth of those assets to inure outside of your estate. Then when you pass away, the asset, along with the growth, is not subject to taxes. There are many types of vehicles one can employ, certain types of trusts that would be a prudent thing for a client to utilize to be able to make the gift and then control who and when gets it.