Estate planning is a very important financial undertaking you should complete no matter how much money you may have. The process of completing this undertaking will provide your family with additional security and peace of mind once you are gone. You can also take certain steps to reduce the amount of estate tax that will be owed upon your death to increase the benefits your family receives as a result of your financial planning efforts.
Estate taxes are commonplace since they must be paid whenever financial assets are transferred from one person to another as the result of a death. The assets and liquid capital transferred to beneficiaries is generally taxable. Even so, you can take multiple steps to effectively reduce the amount of money your family will pay in taxes as a result of the transfer of your assets into their possession.
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.
Once you have established a will, you will be able to identify beneficiaries that will not owe any money on the assets that are left to them. For example, if you leave your financial assets to your spouse, the assets you leave behind will not be touched by the government as a result of the transferring of your assets to your spouse upon your death. While this strategy is very simple, it can be very effective.
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.
A private annuity is another powerful tool you can use to decrease the burdens your family will face when your assets transfer into their possession. This financial vehicle involves the giving of your assets to your loved ones while you are still alive and then they will simply have to make regular payments to you to complete the transaction. Since this process removes your assets from your possession before you die, no levies can be placed upon them at a later date.
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.
Estate taxes are commonplace since they must be paid whenever financial assets are transferred from one person to another as the result of a death. The assets and liquid capital transferred to beneficiaries is generally taxable. Even so, you can take multiple steps to effectively reduce the amount of money your family will pay in taxes as a result of the transfer of your assets into their possession.
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.
Once you have established a will, you will be able to identify beneficiaries that will not owe any money on the assets that are left to them. For example, if you leave your financial assets to your spouse, the assets you leave behind will not be touched by the government as a result of the transferring of your assets to your spouse upon your death. While this strategy is very simple, it can be very effective.
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.
A private annuity is another powerful tool you can use to decrease the burdens your family will face when your assets transfer into their possession. This financial vehicle involves the giving of your assets to your loved ones while you are still alive and then they will simply have to make regular payments to you to complete the transaction. Since this process removes your assets from your possession before you die, no levies can be placed upon them at a later date.
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.
About the Author:
Have you spent any time analyzing your family's estate tax liability? You can ask for support from a professional like an estate law attorney or a CPA. To seek attorneys in your area who specialize in the area of estate law, you can use an attorney referral service like Lawyers.com.
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