Top Ways to Minimize Estate Taxes

Written by admin on September 7th, 2011

The wealth you have accumulated throughout your life is now worth a substantial amount to your heirs.

Estate planners can help you do it in the most tax efficient manner possible. Common issues that many individuals will face will need to be discussed with a estate tax attorney.

You can also get the help of a tax accountant because they have experience in handling various federal inheritance tax.

Those who have a taxable estate and need to prepare for estate planning strategies such as filing an estate tax return its best to seek from a tax attorney.

Some of the issues that you will need to be concerned with include:

Generation Skipping

Spousal Exemptions

Valuation Discounts

Charitable Gratuitous Transfers

I will further discuss some of the common strategies used for you to consider but it is your responsibility to have a lawyer or tax specialist help you set up a plan for transfer of your estate assets.

Generation Skipping Method: One way to avoid double taxation of your estate assets is to utilize a method called generation skipping.

What this does is allow you to leave a sufficient amount of your money to your children and then the rest to your grandchildren.

Second generation will be your children and they will be able to receive their inheritance and avoid being taxed when they transfer it to the third generation which will be your grandchildren.

You can also give out lifetime gifts of ,000 to each child each year because gifts are excluded from your taxable estate.

Spousal Exemptions Method: Depending on what country you reside in the laws for tax exclusion is available for smaller estates.

Upon the death of a spouse a large sum of money could be transferred to a third party this is called bequesting the assets. This helps to avoid a decrease in the value of the estate.

The reason this is done helps protect the savings and when the surviving spouse passes away the same thing can be done a large amount can be transferred to a bypass trust to qualify for the tax exclusion, leaving just a small amount to be part of the inheritance tax.

Valuation Discounts Method: The benefit of owning a business is that it will allowyou to have a significant tax savings.

The fair market value of your assets a tax will be applied otherwise certain discounts cab be used to reduce the taxable value of your transferring assets.

How it works is that if it is a privately held family company then the lack of liquidity and is determined by an intrinsic value of the shares where the valuation model will apply the discount since the shares are not being traded on the stock exchange.

This can also apply if you have a minority interest as a shareholder in the company under a family limited partnership.

Charitable Gratuitous Transfers Method: Putting assets in to your favorite charity during your lifetime which will give you an income tax deduction for your donations.

Most of these types of organizations are exempt from investment taxes so the value of your donation will compound through the years tax free.

This is for informational purposes only and is not to be considered legal advice. It is recommended that you consult a estate tax lawyer or CPA before using any tax free methods.

Tags: , , , , , , , , , , , , , , , , , , , , , , ,

Leave a Reply