Can You Avoid Your Family Obligations And Taxes With Probate Avoidance Tactics?

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Can You Avoid Your Family Obligations And Taxes With Probate Avoidance Tactics?

7 June 2017
 Categories: , Blog

Regardless of the size of your estate, it is important to create a plan for how it should be handled after your death. For many people, estate planning involves finding ways to avoid probate. Before you can decide if you need to take any probate avoidance steps, you need to know what other obligations you cannot avoid through estate planning.  

Your Family 

Depending on the state in which you live, there is a possibility that you cannot use probate avoidance measures to get out of your obligations to them. Some states believe that some relatives have certain rights and they must be respected regardless of what steps you take to get out of them.  

For instance, your spouse's rights could trump any desire you have to cut him or her out of your will with probate avoidance techniques. Some states have laws that entitle the surviving spouse to half of the estate. If that is the case in the state in which you live, you only need to focus on probate avoidance for your half of the estate.  

Other relatives, such as your children, are not entitled to any of your estate. If you choose to not leave them any of your estate, you do not have to worry about the impact it would have on your probate avoidance tactics.  

State and Federal Taxes 

Any tax debt that you have does not disappear with your death. It simply transfers to your estate. A common misconception about tax debt is that there are probate avoidance tactics that you can use to get rid of the debt or remove the responsibility of the estate for it. The reality is, the debt will still be the estate's regardless of the measures you take.  

For instance, if the Internal Revenue Service, or IRS, was scheduled to take your home to pay off a tax debt, whether or not you find a way to avoid probate has no bearing on the agency's plan. The IRS will stay want to be paid for the debt or action could be taken against the estate. The same applies if the beneficiary of your estate has a tax debt. Once the beneficiary receives the inheritance, it is subject to be seized by the IRS. 

There are other factors of estate planning that probate avoidance cannot change. Talk to your probate lawyer to learn more about those and to determine what you can do to handle the trickier parts of your planning.