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Planning for taxes and tax burdens is a crucial aspect of estate planning. However, it can often be overlooked for any number of reasons.
For one, many people consider it an unpleasant topic. It is natural to resent the idea that the government will take some portion of their hard-earned estate. The idea that this can happen before it can pass to their legally designated heirs can be frustrating. Therefore, many choose not to think about it.
In addition, tax law is a mundane, dry, and impenetrable field for the average person with no legal training. It can be difficult for someone to bring themselves to think about it. This is understandable with the busy lives many of us lead, especially in a fast-paced city like Las Vegas.
Fortunately for residents of Las Vegas, Nevada does not impose gift or estate taxes.
Although Nevada does not levy gift tax or estate tax, there are still federal tax laws to be considered.
The 2023 exemption for federal gift tax is $17,000. This means that you must report gifts to the IRS only if the total value is $17,000 or more for a single recipient in a single calendar year.
The gift tax rate is variable, with a maximum of 40%, and increases with the value of the gift:
Nevada is one of the 38 states that does not impose any estate taxes. However, it has not always worked this way.
Estate filing is still technically on the books in Nevada, per state law NRS 375. Currently, though, it is being effectively phased out since it only applies to estates where the decedent passed away on or before December 31, 2004. Even then, it only applies if the value of the estate exceeds the filing threshold.
If the death occurred after January 1, 2005, however—as yours surely will—the State of Nevada does not require the filing of estate taxes. This rule will remain in effect unless the Internal Revenue Service (IRS) reinstates the death tax credit.
It can be easy for those who lack legal training to confuse estate tax with inheritance tax. Nevertheless, they are two different concepts.
An estate tax is levied by a government authority on the estate of a recently deceased person. This tax is calculated and taken from the assets upon death before they are passed on to the decedent’s heirs and beneficiaries. For this reason, an estate tax is referred to as a “death tax” in some areas. In the United States, there is a federal estate tax that applies to high-value estates.
Inheritance tax is different because it applies to assets and money after they are passed to someone’s heirs. In other words, the heir is responsible for the inheritance tax, rather than the estate. Depending on your particular circumstances, this distinction may be meaningless, subtle, or extremely important.
Nevada also does not impose an inheritance tax. However, if a geographically distant relative dies and leaves you money or other assets, you may be subject to the inheritance tax structures of the jurisdiction in which they passed away. A qualified Las Vegas estate planning attorney can help you navigate these complex issues, should they arise.
A: No, the State of Nevada does not impose an estate tax. This is a tax levied against the value of someone’s estate when they die, before it is passed on to their heirs and beneficiaries. Las Vegas residents are still subject to the federal estate tax, however, but only if the estate is above a certain value threshold. More modest estates are not subject to estate taxes at any level.
A: No, Nevada also does not levy any inheritance taxes. In general, the only time you would have to pay inheritance taxes in Nevada is if the decedent you are inheriting assets from passes away in another state that does impose an inheritance tax. Interstate inheritances can become extremely complex issues when laws do not match up across borders. In these cases, it is best to retain the services of a reputable estate planning and tax specialist.
A: Nevada does not levy any sort of tax on gifts. As with estate taxes, however, federal taxes may still apply to gifts. There is a federal gift exemption, which is typically adjusted upward for inflation from year to year. For 2023, any gifts in excess of $17,000 (per person, per year) will be taxed—up to 40% in the case of the most generous gifts.
A: Estate planning is naturally stressful because nobody likes to consider circumstances beyond their own lifetime. But when you need to plan for the transfer of complex or high-value assets, it can quickly become even more unpleasant. By far the biggest pitfall people experience in estate planning is overconfidence. Those who believe setting up their own comprehensive estate plan will be nothing more than typing up a few documents can quickly become overwhelmed. For this reason, it is best to work with the trusted Las Vegas estate planning specialists at Ken R. Ashworth & Associates.
If you have a large estate, complex assets, or a complicated inheritance situation, high-quality estate planning services are available right here in Las Vegas. Our comprehensive estate plans can establish all the necessary instruments to quickly transfer your assets to your heirs free of state interference. We can also help you plan ahead for any tax burdens that might be incurred. Contact us today for a no-obligation review of your circumstances.