Memphis Estate and Gift Tax Planning Attorney
Skilled Tennessee lawyer assists clients with wealth transfers to minimize tax liability
Individuals with substantial estates might run the risk of losing a significant portion of wealth when they bequeath what they’ve accumulated to the next generation. Tennessee, Mississippi and Arkansas don’t have estate taxes, but the federal government does impose such a burden if the estate exceeds a certain amount. At Parham Estate Law in Memphis, I provide knowledgeable counsel to clients on a wide range of estate and gift tax issues so that families can maintain as much of their wealth as possible.
Specific methods of minimizing estate taxes
After discussing your situation and evaluating your needs, I can help with various wealth transfer options, which may include:
- Special needs trusts
- Family foundations
- Life insurance trusts
- Living trusts
- A/B trusts
- Charitable trusts
- Generation-skipping trusts
Legal advice on transferring your assets can help ensure your wealth is distributed according to your wishes. I will work to resolve your estate and wealth transfer issues so that you can feel secure with the legacy you leave behind. My firm can help you reduce your tax exposure through prudent planning, which could include business ownership succession strategies and wealth transfers to your intended heirs or charitable organizations.
Strategic planning for estate and gift taxes
Before making any decision about structuring or transferring assets, it is essential to have a thorough understanding of the tax consequences involved. Although Tennessee no longer has a gift or inheritance tax, there are still numerous concerns that might need to be considered, such as:
- Federal estate and gift taxes — Gifts that exceed the annual exclusion figure and estates valued over the exemption amount must be reported to the IRS and may be subject to a tax rate between 18 and 40 percent.
- Estate tax exemption — The federal estate tax exemption for an individual is $12.06 million in 2022. Sometimes, families are unpleasantly surprised by the imposition of an estate tax because their loved one underestimated the value of their estate. It is possible that the exemption amount might be reduced in the future.
- Annual gift tax exclusions — People looking to decrease the size of their estate for tax purposes can take advantage of the federal exclusion that now allows annual tax-free gifts of up to $16,000 per recipient.
- Alternate valuation elections — This lessens the burden of the federal estate tax if the value of the estate decreases within the six months following the decedent’s death.
- Generation-skipping taxes — Property that is inherited by, or given as a gift to, a beneficiary at least 37.5 years younger than the donor is subject to a 40 percent tax rate if it exceeds the federal estate tax exemption.
Some irrevocable and charitable trusts might also trigger tax benefits, so it is important to fully understand your options advantages of specific legal instruments before determining how to manage your assets.
Why is gift tax planning beneficial?
Strategically planning gifts can help preserve long-term wealth and ease the burden on your loved ones. Though the giver of the gift generally pays the gift tax, it is still important that the recipient of a gift or an estate understand any potential tax consequences. My firm will outline each aspect of the proposed gift and guide you through the necessary paperwork.
Planning for charitable donations
During your estate planning process, you might consider setting aside some money to charity or creating a charity trust. Outright distributions or donations may be made during your lifetime or at death. For donations to individual charities, your donation may allow you to receive a tax deduction depending on the organization. You may choose to leave a restricted gift, requiring that the donation be used for a specific purpose, or allow the charity to determine how to put your generous gesture to the best use.
If you are interested in continuing to contribute to a cause even after your passing, another option to consider is creating a charitable trust. Charitable Lead Trusts (CLTs) allow you to set aside a specific dollar amount to donate for a period of years, with the remaining amount going to your family. Another option is a Charitable Remainder Trust (CRT), which may be beneficial for minimizing capital gains and estate taxes.
Contact a skilled Tennessee estate and gift tax planning lawyer
For sound advice on estate and gift planning and family wealth transfers in Tennessee, Mississippi or Arkansas, call Parham Estate Law at 901-602-3361 or contact me online to schedule your consultation.