What is the federal estate tax exemption and how does it affect planning?

The federal estate tax exemption is the amount you can transfer at death without owing estate tax, and in 2024 it stands at over thirteen million dollars per individual, but this amount is scheduled to decrease in 2026 unless Congress extends current law, making proactive planning important for families approaching that threshold.

How do trusts help reduce estate tax liability?

Irrevocable trusts remove assets from your taxable estate by transferring ownership to the trust, and while you lose direct control, the assets and their future appreciation are excluded from estate tax calculations, reducing the overall tax burden on your heirs.

Why does asset basis matter for heirs?

When heirs inherit appreciated assets, they typically receive a step-up in basis to the fair market value at the date of death, which eliminates capital gains tax on appreciation that occurred during your lifetime, but planning around this rule affects whether to sell or hold assets before transfer.

When should estate planning begin?

Estate planning should start as soon as you accumulate significant assets, own a business, or have family members who depend on you financially, because proactive strategies take time to implement and waiting until health or legal issues arise limits available options.

How does Wisconsin state law affect estate planning for Somerset residents?

Wisconsin does not impose a state estate tax, which simplifies planning compared to states with separate exemption thresholds, but state income tax treatment of trust income and beneficiary distributions still requires coordination between federal and state strategies.

Estate Tax & Legacy Planning

Estate and legacy planning involves more than drafting wills and trusts—it requires tax analysis to understand how wealth transfers trigger obligations and what strategies reduce those burdens before assets pass to heirs. Business owners, investors, and families with significant holdings face estate tax rules, generation-skipping transfer taxes, and income tax consequences tied to asset basis and distribution timing. Paulson CPA LLC provides estate tax and legacy planning services in Somerset that coordinate with legal estate planning to align tax strategy with long-term family and philanthropic goals.

This process evaluates how different asset types are treated upon transfer, what valuation methods apply to business interests or real property, and how gifting strategies or trust structures may reduce taxable estate size while maintaining control during your lifetime. Planning addresses both the federal estate tax exemption and state-level considerations that affect Wisconsin residents.

Arrange a consultation to discuss how tax planning supports your estate and legacy objectives.

Estate tax planning starts by calculating the projected value of your taxable estate and identifying which assets carry the highest tax burden upon transfer. Life insurance proceeds, retirement accounts, business equity, and appreciated investment assets each face different treatment depending on ownership structure, beneficiary designations, and timing of distribution. Strategies may include annual gifting to reduce estate size, establishing irrevocable trusts to remove assets from the taxable estate, or structuring charitable contributions that provide income tax deductions while supporting legacy goals.

Once planning is in place, your heirs receive assets with reduced tax drag, preserving more wealth for their use or continued investment. The process also addresses step-up in basis rules that affect capital gains tax on inherited property, and coordination with attorneys ensures that trust documents and estate plans reflect the intended tax treatment.

Business owners face additional considerations when succession planning intersects with estate planning, including how to transfer ownership without triggering premature tax events or undermining operational control. Valuation discounts, buy-sell agreements, and entity restructuring may play roles depending on business type and family involvement.

What is the federal estate tax exemption and how does it affect planning?
The federal estate tax exemption is the amount you can transfer at death without owing estate tax, and in 2024 it stands at over thirteen million dollars per individual, but this amount is scheduled to decrease in 2026 unless Congress extends current law, making proactive planning important for families approaching that threshold.
How do trusts help reduce estate tax liability?
Irrevocable trusts remove assets from your taxable estate by transferring ownership to the trust, and while you lose direct control, the assets and their future appreciation are excluded from estate tax calculations, reducing the overall tax burden on your heirs.
Why does asset basis matter for heirs?
When heirs inherit appreciated assets, they typically receive a step-up in basis to the fair market value at the date of death, which eliminates capital gains tax on appreciation that occurred during your lifetime, but planning around this rule affects whether to sell or hold assets before transfer.
When should estate planning begin?
Estate planning should start as soon as you accumulate significant assets, own a business, or have family members who depend on you financially, because proactive strategies take time to implement and waiting until health or legal issues arise limits available options.
How does Wisconsin state law affect estate planning for Somerset residents?
Wisconsin does not impose a state estate tax, which simplifies planning compared to states with separate exemption thresholds, but state income tax treatment of trust income and beneficiary distributions still requires coordination between federal and state strategies.

Structures That Preserve Wealth Across Generations