February 03, 2025

When Does a Texas Estate Plan Need to Address Estate Taxes?

Business people signing contract making deal with real estate agentSince 1982, Villeda Law Group has been providing comprehensive and effective estate planning solutions throughout Texas. Our team of experienced attorneys understands the importance of creating a customized estate plan that reflects your unique goals and protects your loved ones.

Estate planning is an essential process to ensure that your assets are distributed according to your wishes after your passing. However, when it comes to higher-value estates, tax implications can significantly impact what your beneficiaries receive. When and why your Texas estate plan needs to address estate taxes is crucial for ensuring your legacy is preserved.

What Are Estate Taxes?

Estate taxes are levied on the transfer of an individual’s assets upon their death. While the federal government imposes an estate tax, Texas does not have a state-level estate tax or inheritance tax. This distinction makes Texas an attractive state for those looking to minimize tax liabilities on their estates. However, even without state estate taxes, federal estate taxes may apply to larger estates.

The federal estate tax exemption for 2024 is $13.92 million per individual. Estates valued above this threshold are subject to a progressive tax rate of up to 40%. For married couples, the exemption can effectively double to $27.84 million with proper planning, thanks to the portability provision. However, careful structuring of your estate plan is necessary to fully leverage these benefits.

When Does Your Estate Plan Need to Address Federal Estate Taxes?

Your estate plan needs to address federal estate taxes under the following situations:

Engaging with a skilled estate planning attorney is essential for estates near the exemption threshold. The Villeda Law Group, a trusted name in McAllen for their estate planning services, offers comprehensive strategies to minimize estate tax burdens while protecting your family’s financial future. To protect your wealth and ensure the majority of your estate passes to your beneficiaries, there are several strategies you can employ:

These strategies are complex and require the guidance of experienced wills, trust, and estate lawyers. An experienced estate planning attorney in McAllen, TX can help tailor these solutions to meet your unique needs.

What Happens Without Proper Planning?

Without addressing potential estate taxes, your beneficiaries could face significant financial burdens. For example, if your estate exceeds the federal exemption by $2 million, your heirs could face an $800,000 tax liability at a 40% rate. Such unexpected costs may force the sale of valuable assets, including family homes or businesses, to cover the tax bill.

Don’t wait until it’s too late. Let us help you create a comprehensive estate plan that addresses tax implications and secures your family’s future. Contact us today to schedule a consultation with our knowledgeable attorneys in McAllen, Texas.