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Navigating Taxes and Estate Planning: Frequently Asked Questions

On Behalf of | Mar 4, 2024 | Arizona Estate Planning, Arizona Property Inheritance, Arizona Tax Exemptions, Arizona Taxes, FAQ's for Estate Planning

Tax season can be a complex and stressful period for many people. It’s also a time when questions regarding estate planning and its potential impact on taxes often arise. At Windrose Law Center, we understand navigating these complexities can be overwhelming. To help alleviate some of that stress, we’ve compiled answers to some of the most frequently asked questions about estate planning and tax season:
  1. What is estate planning, and why is it important?

Estate planning encompasses the process of creating a comprehensive plan to manage your assets and ensure their distribution according to your wishes after your passing. It is crucial for ensuring your loved ones are taken care of and your financial legacy is managed effectively. At the core of any good estate plan is either a will or trust to direct the process of distributing your assets upon your death. We will assess your needs and make a recommendation that is tailored to you and your specific situation.


  1. How does estate planning relate to taxes?

Estate planning plays a vital role in minimizing the tax burden your loved ones may face upon inheriting your assets. Effective planning strategies can significantly reduce estate taxes and income taxes on inherited assets. For 2024, the federal estate tax threshold is $13.61 million per person. That being said, even if you don’t have a taxable estate, having an estate plan in place can help manage taxes for your loved ones on assets they inherit.


  1. When should I start thinking about estate planning?

There is no “one size fits all” answer to this question. Really, if you don’t already have a plan in place, there’s no time like the present to get started. However, it is generally recommended to start considering estate planning when you acquire significant assets, get married/divorced, have children, or experience any major life changes. With spring and summer coming up, it’s also a good time to create an estate plan before any big vacations you may have planned.


  1. What are some common estate planning tools?

Several essential tools are used in effective estate planning, including:

  • Wills: A legal document outlining your wishes for asset distribution after your passing. A will generally must go through the Arizona probate process after your death.
  • Trusts: Legal arrangements allowing you to transfer ownership of assets to a trustee who manages them for the benefit of beneficiaries. During your lifetime, you manage everything for your own benefit. After death, your trustee takes over the reins. 
  • Power of attorney: Appoints someone to make financial and/or healthcare decisions on your behalf if you become incapacitated.
  • Beneficiary designations: Naming individuals or entities to receive specific assets, such as retirement accounts or life insurance policies.


  1. Are legal fees for estate planning tax deductible?

Unfortunately, legal fees associated with estate planning are generally not tax-deductible as personal expenses since the passage of the Tax Cuts and Jobs Act in 2017. However, if your estate planning involves managing business assets or income-producing property, there may be limited tax deductions available. It’s important to consult with your tax advisor to understand the specific tax implications in your situation.

  1. What are some things I can do during tax season to benefit my estate plan?

While tax season isn’t the sole focus of estate planning, it can be a perfect time to review and potentially update your existing plan. Consider these steps:

  • Review and update beneficiary designations: Ensure your named beneficiaries haven’t changed and still reflect your current wishes, especially on your life insurance policies.
  • Review the value of your assets: Fluctuations in asset values can impact your estate tax liability. If you are nearing the threshold of estate tax liability, keep an eye on these.
  • Discuss your plan with your loved ones: Open communication with your loved ones about your estate plan can help avoid confusion and potential conflict in the future.

For personalized guidance and creation of an effective estate plan tailored to your unique circumstances, consider scheduling a consultation with us today!