In the previous parts of
this blog series, the overarching theme has been
protecting your assets. In this, the final part, of the blog series, we will
answer a few more questions about your assets, namely whether your heirs will
have to pay taxes on your assets and how you can protect your assets from a
nursing home. With these questions answered, entering retirement is not as
worrisome as it seems.
Will my heirs have to pay an estate tax when they
inherit my assets?
Unless you have a large
estate, it is unlikely that your heirs will have to pay taxes on their
inheritance. Currently, any amounts under $5 million are exempt from
federal taxes. Similarly, any amount of money left to a charity is exempt
from the federal estate tax. Your spouse will not have to pay federal taxes on
your estate if your estate is going to them.
While you may be exempt
from federal estate taxes, you may still be liable for state estate taxes.
States generally take much fewer taxes out of estates than the federal
government. For example, New Jersey currently taxes estates of $675,000 or
greater at 11% - 16%. The exact percentage that your heir is taxed depends on
the state and how they are related to you.
How can I protect my assets from a nursing home?
When nursing
home care becomes the only option, the cost can become overwhelming and
protecting your assets1 can be a challenge. The nursing care facility
or Medicaid may attempt to take your assets to pay for your nursing home care.
So, in the event you should require nursing home care, proper planning can
prove invaluable.
It is a good
idea to retain an attorney that is familiar with the laws of your state as well
as Medicare and Medicaid. This can be crucial in helping protect your assets
and the assets of your spouse. A financial planner will also be an essential
member of your planning team as he or she can assist you in taking an inventory
of your assets. The key to protecting your assets is being informed both
legally and financially. Most importantly, do not rely on the advice of
non-professionals. Many people believe the only way to protect your assets from nursing home care is liquidating assets. This could prove to be very costly.
When you’re
sure that your assets are adequately protected, entering retirement is no
longer a scary step in life. At Kemp & Associates, we want to help you navigate through the difficult and
exciting journey of retirement. If you need advice, contact us today.
1 "Asset." Investopedia; http://www.investopedia.com/terms/a/asset.asp#axzz23WWcPp5H
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