Many people spend a lifetime acquiring assets and want to leave those to their heirs, beloved family members and friends -- not to the government. That requires shepherding the assets with great care so that the majority of the estate won't be lost to taxes. Doing so involves clearly understanding everything that can reduce the overall value of the estate. That way, when the government takes a big piece of the pie through taxes, there will still be some left to go to family members and friends of those whose labor created the estate in the first place.
One of the things that can reduce the value of the estate is death-related costs. Sometimes, this expense is not anticipated in full measure, and heirs get caught by surprise. Death-related expenses are more than just the funeral and burial.
They may also include end-of-life expenses, which can accumulate to the very last minute if there was a fatal illness. In that case, the bill may come due after the person died. Additionally, there may be other bills that the deceased has that need to be paid, like credit card bills and utility bills.
An attorney, an accountant and an appraiser may need to be hired as part of the probate process. That process will also have other costs. Additionally, there may be unsettled loans or taxes.
The obligations of the estate can force what is called a "fire sale" if there is insufficient cash on hand to cover expenses. This means that a family home may need to be sold at less than market value to meet the financial obligations. It may even mean a family business has to be sold quickly. To avoid costly complications like those, estate planning should be done with the help of an experienced attorney.
Source: The Advertiser, "Plan ahead to protect your estate" Mary Fox Luquette, Oct. 18, 2014