Estate planning can be a very useful tool for those interested in preserving the financial well being of their families. By taking a few simple steps to make arrangements for your loved ones and their financial needs, you can be certain your family will receive the inheritance that is due to them as a result of your passing. In order to give your family the most money possible when you assets are transferred into their possession though, you should take a few steps to decrease the amount of estate tax that will be owed as a result of this transfer.
Taxes generally must be paid whenever there is an exchange of valuable property at the time of a person’s death. Payments are not owed to the government when certain types of financial vehicles are exchanged though. By taking advantage of these financial instruments and numerous other tactics, you can easily reduce the size of the payments your family will have to make to the government once they inherit your assets.
The type of assets being transferred for instance often comes with varying degrees of taxability. You can greatly reduce the amount of taxes that will be owed at the time of your death by maintaining the right type of financial assets while you are still alive. For instance, there are certain types of trusts you can place your money in to greatly reduce the amount of taxes your family will owe in the future.
The establishment of a will can also be used to greatly reduce the amount of taxes that will be owed as well. A will can provide your family and legal courts with guidance as to how you wish to have your assets dispersed. By outlining a clear will for legal courts and your family to follow once you are gone, your family will be able to avoid quarreling with each other in order to gain access to the assets and your financial worth will be dispersed in a manner that is more to your liking as a result.
A will can also be used to disperse financial assets to recipients that will not be heavily taxed as a result of receiving an inheritance from you. For instance, financial assets left to a spouse are not taxable when your assets are transferred to them. This simple step can greatly reduce the amount of money your family will owe to the government when they inherit your assets.
Another great method you can use to decrease the amount of taxes your family will have to pay is the method of gifting. You can gift numerous individuals $12,000 or less per year without being taxed. If you make these gifts to your family each year and your spouse does so as well, you can transfer a large portion of your liquid assets to your family to avoid paying estate taxes on that capital.
Another powerful process you can use to decrease the amount of estate taxes your family will pay is the process of establishing a private annuity. A private annuity essentially results in the transfer of your assets prior to your death through the sale of an annuity. Then, payments can be made by the beneficiaries to complete the transfer.
In the end, it really all comes down to planning. There are numerous techniques you can use to decrease the amount of estate tax your family will ultimately pay. By properly planning for the future, you can take advantage of every technique at your disposal.
To properly cover all bases when it comes to estate tax, one should speak with a professional like an estate law attorney or a CPA. To find a local attorney focused on estate law, check out a lawyer referral service like Lawyers.com.