How Do I Plan for Taxes after Death?

Let’s get this out of the way: preparing for death doesn’t mean it will come sooner. Quite the opposite is true. Most people find preparing and completing their estate plan leads to a sense of relief. They know if and when any of life’s unexpected events occur, like incapacity or death, they have done what was necessary to prepare, for themselves and their loved ones.

It’s a worthwhile task, says the recent article titled “Preparing for the certainties in life: death and taxes” from Cleveland Jewish News and doesn’t need to be overwhelming. Some attorneys use questionnaires to gather information to be brought into the office for the first meeting, while others use secure online portals to gather information. Then, the estate planning attorney and you will have a friendly, candid discussion of your wishes and what decisions need to be made.

Several roles need to be filled.

• The executor carries out the instructions in the will.
• A guardian is in charge of minor children, in the event both parents die.
• A person named as your attorney in fact (or agent) in your Power of Attorney (POA) will be in charge of the business side of your life.
• A POA can be as broad or limited as you wish, from managing one bank account to pay household expenses to handling everything.
• A Health Care Proxy is used to appoint your health care agent to have access to your medical information and speak with your health care providers, if you are unable to.

The Estate Planning Process

Your estate plan can be designed to minimize probate. Probate is the process where the court reviews your will to ensure its validity, approves the person you appoint to be executor and allows the administration of your estate to go forward.

Depending on your jurisdiction, probate can be a long, costly and stressful process. In Florida, probate can stay open for a few months to several years, depending on the estate's complexity and whether there is litigation.

Part of the estate planning process is reviewing assets to see how and if they might be taken out of your probate estate. This may involve creating trusts, legal entities to own property and allow for easier distribution to heirs. Charitable donations might become part of your plan, using other types of trusts to make donations, while preserving assets or creating an income stream for loved ones.

Minimize Taxes

Minimizing taxes should be a part of your estate plan. The lifetime gift/estate tax exemption is $13.61 million in 2024 and 2025. The lifetime gift/estate tax exemption is projected to be $7 million in 2026. Planning for this lowered number makes sense.

Reviewing an estate plan should take place every three to five years to keep up with changes in the law, including the lowered estate tax. Large events in your family also need to prompt a review—trigger events like marriage, death, birth, divorce and the sale of a business or a home.

Reference: Cleveland Jewish News (May 13, 2022) “Preparing for the certainties in life: death and taxes”

Suggested Key Terms: Estate Planning Attorney, Executor, Guardian, Probate, Power of Attorney, Health Care Proxy, Heirs, Charitable Donations, Trusts, Tax Exemptions, Trigger Events, Incapacity