Estate Planning: Key Steps to Pass Money to Your Family

Many people work hard their whole lives to build wealth. But they often don't think about how to pass that money to their children and grandchildren. This is called estate planning. It's one of the most important parts of managing your money, but many people put it off.

Estate planning helps you decide who gets your money when you die. It also helps you pay less in taxes. The government has rules about how much money you can pass on without paying extra taxes. These rules change over time, so it's important to understand them.

You can pass millions without paying estate taxes

Right now, you can give up to $13.99 million to your family without paying federal estate taxes. If you're married, you and your spouse can give up to $27.98 million together. These are very high amounts that most families won't reach.

These high limits were supposed to end in 2025. But Congress may keep them or even make them higher. The chart shows how these limits have changed over time. While the limits have gone up, the tax rate for wealthy families has stayed around 40%.

Giving money while you're alive can help

If you have a lot of money, you can give some away each year without paying taxes. In 2025, you can give up to $19,000 per person. So if you have five grandchildren, you could give $95,000 total each year. A married couple could give twice that amount.

This strategy works well over many years. You can move a lot of money out of your estate this way. It's even better if you give away things that will grow in value, like stocks or real estate.

State taxes can be different

Some states don't have estate taxes at all, like Florida and Texas. Others have lower limits than the federal government, like New York and Massachusetts. Where you live when you die can affect how much tax your family pays.

State tax laws change often. This makes planning harder because what works today might not work tomorrow.

Special tools can help protect your money

Estate planning uses more than just a will. You can set up trusts, which are special accounts that hold your money. Some trusts can help reduce taxes. Others can support charities while also helping your family.

There's also a rule called "stepped-up basis" that helps with taxes. When someone inherits stocks or other investments, they don't have to pay taxes on gains that happened before they got them. This can save a lot of money.

Estate planning has become more important because of changes in tax laws and high asset values. Families have more ways to pass money to the next generation, but the rules are complex.

The bottom line? Estate planning helps protect your family's financial future. Everyone should review their estate plan regularly, not just wealthy families.

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