Inheritance is not an income. But, if you have subsequent earnings on the inherited assets, then they are all taxable. If you are planning to sell your inherited property, for example, you can avoid being taxed. How? Ask a tax lawyer in Sherman Oaks.
Tax Lawyer in Sherman Oaks to Avoid Taxes
Indeed, income from the sale of inherited investments are taxable. However, you can avoid that by claiming losses on sales. But, taxes on inheritance can vary. You should check with your treasury or contact our tax lawyer to help you out.
Choose Alternate Valuation Date
The fair market value of the property is one of the bases of tax in your inherited property. But, the executor can pick the alternate valuation date. It can be six months after the decedent’s date of death.
This will only be available if it will lower the gross amount of the estate and tax liability. The result of this will be a higher inheritance to the property’s beneficiaries. A property sold within six months is actually valued on the date when the property was sold. It is not subject to estate tax, as the valuation date is the owner’s date of death.
Put in a Trust
You should suggest to your parents that they set up a trust to help you deal with their assets when the time comes that they have to say goodbye to the world.
With a trust, they can pass assets to their beneficiaries after their death. It means that you do not have to go through probate. It is similar to a will. However, trust prevents state probate requirements. It also avoids any expenses.
Having a revocable trust, the grantor can easily take the assets out. But, if your parents set up an irrevocable trust, it is tied up with the assets until your parents die.
Your parents must not put their assets in joint names. Doing so will only increase the taxes that you will pay when they die.
Keep in mind that when they die, the joint holder, you, will inherit the assets and also the basis. It is used to find out the taxable gain in value throughout the years. It can be a significant tax when you sell the asset.
It makes sense to be generous after you have inherited some assets from your parents. You can donate some of the money to offset the taxable gains through the tax deduction you can get from donating the money to a charitable organization.
You are not only helping other people but you are also helping yourself from not paying a huge amount of tax on your inheritance.
Now, if you are trying to leave your money to your kids when you die, you may consider yearly gifts to your beneficiaries. The gifts are not subject to taxes. It reduces the size of your assets.
To learn more, contact our tax lawyer in Sherman Oaks. Dial this number (213) 596-0265 to help you stay current with the estate tax laws.