Each year, the IRS performs audits on tax returns, and discovers that many of us are making costly mistakes. But who do they target for these audits? Sometimes, audits are conducted at random, but in general the IRS has an idea of who is most likely to make a mistake. Large estates tend to trigger the most suspicion at the bureau.
The federal estate tax exemption is now $15 million per individual (or $30 million for a married couple) as of 2026, and will adjust upward for inflation in future years, so the vast majority of estates today owe no federal estate tax at all. But that doesn’t mean estate planning matters any less — sizable estates that do exceed the exemption still draw close IRS scrutiny, state-level estate or inheritance taxes can apply at much lower thresholds in many states, and poor planning can still trigger drawn-out probate, family disputes, and unnecessary costs for your heirs regardless of your estate’s size.
Estate planning still matters even for those below the federal exemption threshold. After you pass away, your heirs will have enough to worry about, between grieving, planning a memorial service, and sorting out various legal and financial matters. The last thing you want to do is leave them with a tax audit fiasco! But that’s exactly what often happens, particularly to those who neglect to take adequate financial and estate planning steps.
There are many different ways to shelter your estate from excessive taxation, and to protect your heirs from tax audits and costly settlements. These steps will be completed with an estate planning attorney. However, because these decisions are made while you’re still alive, and they impact your financial and tax planning, we like to offer our support to clients during this process.
We can help you with gifting strategies, charitable foundations, and other financial strategies to potentially reduce your taxable estate. As you continue to plan for the future, remember to integrate estate planning with your overall financial plan. Give us a call, and we can discuss these issues in depth. Careful planning now can prevent a major headache down the road, and offers you the financial stability you deserve.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
Source: http://www.financial-planning.com/news/estate-tax-tips-for-wealthy-clients