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Estates and taxes: Timely legal advice can deflect many tax issues

“When the estate goes to settle,” says one commentator on estate planning, “the taxing authorities are right at the front of the line.”

That observation underscores one crucially important element that many individuals and families simply fail to think about much -- if at all - when they are attempting to put into place an effective estate plan to provide for loved ones and future generations.

That element is taxes, which are estimated to become an issue for about one in every 10 estates.

As a recent article on the subject notes, it can be hard to untangle inherited tax complications, as well as expensive. Or, as the media piece states, “You can pre-empt the issue in advance.”

Doing that requires an appreciation for the central role that taxes can play when an estate settles, which is cultivated through close discussions with and input from an experienced estate planning attorney well-versed in tax implications and conserving estate wealth.

A representative example of that is the case of a Texas couple who owned an apartment in New York that they used for business-related reasons. Following the wife’s death, authorities in that state claimed that the husband and wife were New York residents, a designation that would trigger a hefty tax claim on the estate.

The estate ultimately won that battle, but not before spending considerable time, effort and money to do so. The matter might have never been broached had a proven estate planning attorney been on board earlier to identify a possible conflict and defer it through properly defining the couple’s relationship to New York.

The point: Many tax-related issues that come up in estate settlements could have been effectively identified and dealt with in advance through the intercession of proven planning counsel, saving an estate substantial money in the process.

Source: Chicago Tribune, "Plan now to avoid inheriting a tax mess," Amy Feldman, Aug. 8, 2013

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