Death and Estate Tax Services

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Death and Estate Tax

Utah Residents Can Avoid Estate Tax with Planning


Estate Tax, sometimes called “death tax” or “inheritance tax” is a common topic of
discussion with our clients. Under the current regimen, most Utah Residents will not owe
estate taxes but they may inadvertently cause taxation their descendants would otherwise
not have to pay.

What is the Estate Tax?

The Estate Tax is a Federal Tax on large estates. As of 2019 the Federal estate exemption
amount is $11.4 million per person. This means that each individual can leave behind $11.4
million to their descendants completely tax free. Note this only applies to descendants; the
Unlimited Martial Deduction allows for the unlimited transfer of assets tax free between
spouses in life and in death. For those estates that do incur taxes, the rate can be steep, up
to 40% of the estate remaining after exemptions and deductions. A person’s estate is defined
broadly for taxation purposes. Real estate, liquid assets, retirement plans and even life
insurance can be included in an estate.
The Federal Estate Deduction is in constant flux. For example, in 1998 the exemption was
only $625,000 per person with a max taxation of 55%. The exemption amount in 2008 was
$2 million. The rate jumped in 2010 to $5 million where increased incrementally until 2017
when it jumped to over $11 million. The current tax exemptions are set to expire in 2025
and unless Congress intervenes will revert back to $5 million. For this reason, even if estate
tax is not a current concern, the volatility in the exemption amount means that even middle
class Utah Residents should prepare to avoid taxes in their estate plans.
While other states impose their own Inheritance Tax, Utah taxes its residences only when
Federal Tax is due. For all intents and purposes, this functions as if Utah does not have its
own tax.
Legal options exist to minimize the impact of estate taxes for large estates. Careful planning
can greatly alleviate the burden left on future generations.

Adding Children to the Deed Can Cause Extra Capital
Gains Taxes

A generally bad strategy involves adding a child or children to the deed of your home. People
sometimes think that they will make things easier if they transfer ownership of their assets to
their children before they die or enter a nursing home. The problem with this strategy is that it
will often result in extra capital gains taxes. For most people, transferring property to a trust can
often achieve the desired result without incurring the extra taxes.
Property owned by Utah Residents gets a stepped-up basis at the time of the owner’s death. This
means that their heirs receive the property with an ownership interest equal to the asset’s value at
the deceased person’s date of death. For example, if a person buys a home for $100,000 and
when they die the home is valued at $300,000, their heirs will not owe taxes on the home up to
$300,000. However, if that same person had transferred the home to his son prior to his death,

the property would not get the stepped-basis and the son would owe taxes on any amount over
the original purchase price of $100,000. The takeaway here is that transferring property can have
unintended consequences and should be discussed with legal and financial professionals.

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Veterans Benefit Planning Utah Law Firm Morgan & Associates
Sami Draper
Sami Draper
04:17 18 Mar 19
Answers the phone on the weekend and is so willing to help you on their days off. Extremely helpful and friendly.read more
lynn lindstrom
lynn lindstrom
22:45 15 Mar 19
They were kind and helpful explaining every thing helped me with other things I needed done would use them again no problem excellentread more
Charlotte Stock
Charlotte Stock
17:23 01 Feb 19
Christopher Morgan listens closely and is very knowledgeable about Utah law concerning estate planning, health care directives, and wills. I was amazed at his ability to give me the help and advice I needed to be completely satisfied and at peace with every document he made for me. He certainly has my vote of confidence. I highly recommend him to everyone. Charlotte Stockread more
Janelle Wakley
Janelle Wakley
22:23 25 Jan 19
Chris was very helpful when my husband and I had questions about our Medicaid application. He is friendly and professional.read more
Wolfiere Labs
Wolfiere Labs
20:38 25 Jan 19
JoAnna Hall
JoAnna Hall
17:14 21 Dec 18
If you're looking to get your estate planning, trust in order, Chris is the guy!! He is so thorough and explained everything in terms we understand and knows what he is doing! Very pleasant experience and we HIGHLY recommend him! Thanks Chris!read more
Joe Clements
Joe Clements
19:25 05 Dec 18
We needed help with making a Will and Trust. Chris got us in quickly and produced our documents at a super affordable cost! Highly recommend!!read more
Ben Tyler
Ben Tyler
05:57 02 Nov 18
My wife and I hired Chris Morgan to help us with our Estate Planning documents and could not have been more pleased! Chris was responsive to our every need, flexible in his scheduling, patient and clear in educating, sensitive to our interests, and produced a product which far exceeded expectations. But this really didn't surprise me, considering the raving reviews he's received from his clients. With binder of completed documents in hand, my head will rest more comfortably on my pillow tonight. Thank you, Chris, for making our most important priorities your own. We look forward to receiving our first Christmas card :).read more
Bonnie Hill
Bonnie Hill
21:32 31 Jul 18
Chris was really great to work with! On our first meeting he was very knowledgeable and funny and easy to talk to! He explained things and addressed all our concerns and questions. He made things fun and eased any tensions. He seems honest and fair. The best part is that he was willing to come to our home for the meeting. He was easy to work with schedule wise as well. I would definitely recommend Chrisread more

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