3 Ways to Minimize Estate Planning Taxes
Estate taxes can balloon significantly, but certain techniques can always help you bring down the payable amount. These are within the legal parameters as well, so you can easily take them on without worrying. Here are some of the most commonly recommended ones:
Giving Away Gifts
An excellent way of minimizing estate taxes is to pass on some of your wealth to other people in the family. There are limits to the amount you can give away tax-free, which is either $15,000 if you’re single or twice that amount for those married and with joint tax returns.
It’s an excellent method of utilizing the amount that would’ve otherwise been taxed, keeping the money within your family, and minimizing taxes on the estate. In a similar vein, you can look into CRT and CLTs as well.
Irrevocable Life Insurance Trusts
People often invest in life insurance policies to ensure their beneficiaries and inheritors don’t fall into a financial pitfall. The problem is that even though life insurance proceeds aren’t taxed, they can be added to your estate taxes, making them taxable after your passing.
You can remove the estate taxes from becoming a part of your taxable liabilities by going for an irrevocable life insurance trust, which creates a trust and grants ownership to them. You can’t make changes to it later on, hence the term irrevocable.
Set Up A Family Limited Partnership
For those that own family-owned assets or businesses like property, a family limited partnership is a good option. After your passing, your children will become the owners of whatever assets and properties you pass on to them.
It includes a general partnership, which would create the partnership, while any heirs or partners will be the limited partners. The general partner has the autonomy and decision-making power, while the limited partners own a stake in the company or have a few assets to their name. It reduces the size of the estate, hence limiting the taxable amount as well.
Acquiring Legal Services
There’s a lot of money you can potentially save with the help of a competent estate lawyer who can sort out the details for you. Reach out to Ledwidge & Associates, specializing in real estate law, to help you sort out tax minimization techniques.
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