Estate Tax Consultation
Although Henderson & Associates, Inc. does not represent itself as a tax accounting firm, the company does recognize the need for those timberland owners whose assets may exceed the qualified exemption to be aware of tax ramifications. Proper estate tax planning is very important in minimizing estate tax liability for those families who have significant assets.
State and Federal Estate Taxes/ Estate Valuation
Currently, South Carolina does not levy an estate tax on individuals. In recent years, the federal qualified exemption for individual estates has increased significantly and is $5.6 million per individual for 2018. Consequently, a married couple can transfer up to $11.2 million of asset value to their heir’s tax free. Unfortunately, tax laws could be changed by government entities in the future. Timberland owners should keep abreast of any changes in estate tax laws by communicating with competent estate tax attorneys and tax accountants who possess the knowledge and experience to develop tax strategies to minimize estate tax liability. Henderson & Associates, Inc. can work closely with landowners’ legal and tax advisors in accurately estimating the value of their timberland holdings.
Landowners should also be aware of the “step-up in tax basis” rule which allows the value of an inherited property to be increased or “stepped-up” by an heir to the value on the date of death of the decedent. Under certain circumstances, an alternate valuation date six months from the date of death can by elected. Increasing or stepping-up the tax basis in a property can result in a significant reduction in federal estate taxes if the value of the inherited assets exceeds the qualified exemption. Again, Henderson & Associates, Inc. can conduct an appraisal of the inherited land and timber to estimate the value as of the decedent’s date of death. Taking advantage of a step-up in tax basis for inherited timberland can result in significant capital gains tax savings if properly documented.