With proper planning, hard work pays big dividends during the golden years of life we call retirement. Planning those golden years requires the minimization of taxes for maximum enjoyment. Our Houston estate planning attorney is here to help you protect your hard-earned money for a better future.
Estate Planning is Dynamic
The challenge lies in orchestrating a balanced retirement plan that benefits yourself and your loved ones. Ideally, such a plan will be analyzed and updated with regularity to reflect alterations to your financial situation. A Houston estate planning attorney will help you plan to protect your money and your beneficiaries.
A stagnant estate plan will inevitably go stale and prove ineffective as estate laws are subject to change based on political victories and alterations to the law. Both property and funds, including retirement accounts, have the potential to be subjected to taxes. Tax rates are bound to change as time progresses so be sure to meet with an estate planning attorney in Houston at least once every year for a comprehensive review and strategic plan modification.
As an example, few people outside of those who work in the field of estate planning law understand the Tax Cuts and Jobs Act of 2017 made alterations to individual income tax including a hike in estate tax exemptions. Heirs to retirement accounts and estates are taxed on wealth that surpasses the estate tax exemption.
Consider the Tax Implications of Retirement Accounts
Conventional retirement accounts such as regular IRAs are funded using pre-tax money. Subsequent withdrawals of the funds are taxed similarly to regular income at the point of distribution to beneficiaries. Alternatively, Roth retirement accounts are funded using post-tax dollars. Subsequent qualified withdrawals are made without taxation.
Consider a hypothetical situation in which you have a conventional retirement account with half a million dollars. The account is to be passed on to your offspring at the point of passing. The current system provides the beneficiary with a decade of time to withdraw the funds. Distributions taken are added to income and taxed appropriately.
The alternative is to pass a Roth IRA to offspring in which distribution is tax-free across the ensuing decade. Even the account’s growth during the decade is tax-free.
Strategic Estate Planning Done Right
Though it seems counterintuitive, it is sometimes logical to distribute assets before retirement. The early distribution of assets including retirement account funds helps keep one’s total estate below the exemption amount.
Meet with an estate planning attorney and you might find it makes sense to give heirs yearly monetary gifts as opposed to a lump sum at the time that the estate is distributed after passing. Your attorney might also advise making charitable donations throughout the course of life that are tax-free. Such gifts can be deducted from tax returns.
Learn More During a Consultation With Our Houston Estate Planning Attorneys
Estate planning requires the expertise of a proven attorney. We provide estate planning services including asset protection and tax planning. Contact us for a consultation today.