Beyond the Will: How to leave the most behind when you die

All of us will eventually die, and we generally want to leave something good behind for our loved ones.

As morbid as it sounds, putting some planning now into your legacy after death can help ease the burden on your family.

Proper estate planning can mean the difference between your assets and cash going to your children or grandchildren when you die, or to the government. 

The IRS will still get its share (of course), but there are things you can do to ensure they get as small a piece of the pie as they legally can.

To leave instructions for these things, as well as others, it’s important to make a will and keep it updated after any significant life events.

Taxes after death

As unfortunate as it sounds, the truth is that even after you die, you will still owe some taxes. 

These can take a few different forms: income tax, estate taxes, and inheritance taxes.

Income tax

Envato/witsaruts

Tax concept.Calculator with taxes text with money on 1040 tax form

Since tax for the year’s income is not calculated and paid until the following year, someone who dies during the year may still owe taxes on their income that year.

Depending on how much money you made during the year, a family member may have to file a final tax return for you.

How much this tax bill will be depends on the amount of money you earned during the year. 

This is one reason it’s smart to plan for retirement using Roth IRA’s – money you withdraw from a Roth IRA account is not taxable after you’re over 62. 

Estate taxes

Estate taxes, also known as “death taxes”, are a tax on a person’s assets that they leave behind after they die, and before these items go to whoever is inheriting them.

Thankfully, death taxes are pretty rare – your estate needs to be worth at least $12.9 million for it to owe estate taxes.

Envato/Pilat666