Articles Tagged with inheritance tax

Receiving an inheritance in Wisconsin comes with many questions, including those about state and federal taxes. Fortunately for state residents, changes to federal tax laws in 2013 gave heirs a big break on how much tax may be levied against an inheritance.

The American Taxpayer Relief Act of 2012 (ATRA 2012) effectively ended inheritance and estate taxes for Wisconsin residents and drastically increased the threshold for federal taxes as well. Until the bill’s passage, Wisconsin estate taxes were directly tied to rates on federal inheritance taxes under what is known as a “pickup tax.”

Under the old law, Wisconsin “picked up” a portion of the credit for state death taxes allowed on the federal estate tax return (federal form 706 or 706NA). Because there is no longer a federal credit for state estate taxes on the federal estate tax return, there is no longer basis for the Wisconsin estate tax.

Let’s face it. many people HATE paying tax. And many people hate paying income tax when distributions are made from their IRA.8942c891917593748f2b7930878e34f5-300x300

We recently were working with a gentleman from our area on his estate plan. He owned property in Dane County. He had never been married and he never had children.

He wanted to leave some things and some money to a family member of his, but he liked the idea of setting up some scholarship funds. So, after quite a bit of discussion, he decided to name his college as the beneficiary of part of his IRA when he died. But he did not want the funds from his IRA to go into the general funds of the college. So, we are restricting the IRA so that it can only be used in a certain curriculum of the university. Now, he knows that students in his prior field will benefit from scholarships that he establishes.

No Estate Tax, No Worries?

Will I Owe Estate Tax?

You may have read recently a great deal about the debate regarding estate tax making it appear as if avoiding estate tax is the most important reason why individuals and couples need to prioritize estate planning. However, this is simply not the case. In fact, with the current federal estate tax exemption of $10.68 million for married couples and $5.43 million for individuals, estate tax is not an issue for the majority of individuals who need to begin the estate planning process.

Top Reasons Why You Need an Estate Plan

If avoiding estate tax is not a priority for you in the estate planning process, one or more of the following common reasons for estate planning probably apply in your case. Continue reading