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Q.Does a Will Increase Probate Expenses or Taxes?
A.Probate court fees are set by law and based on the size of the estate. Whether you have a Will or not, makes no difference. At present (2008), the Federal Estate Tax exemption is $2,000,000. In 2009, the federal estate tax exemption will increase to $3,500,000 per taxpayer. Estates in excess of the exempt amount can be taxed at a rate from 45%. In 2010 however, the federal estate tax exemption will be reduced to $1,000,000. Consult a tax or financial professional to determine a plan that is right for you and your family.
Now, I cannot say this loud enough…A simpleRevocable Living Trust will NOT save any tax! It may, however, save the estate from paying Probate Court fees.
You may be able to minimize your estate tax by giving gifts during your lifetime. You can also cover the cost of estate taxes by purchasing a life insurance policy intended to pay taxes. Talk to your life insurance agent to find out more about how this works.
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